ACTIVE WITH INDONESIA INDONESIA: a key partner for the OECD Indonesia continues to be a strategic partner for the OECD, and it is important that we retain and intensify our engagement as the country’s role in the global economy increases. Indonesia was the eighth largest economy in the world in 2016, with a GDP of around USD 3.0 trillion at PPP, and it is expected to be the fourth largest economy by 2050, with a projected GDP of USD 10.5 trillion at PPP. As the largest country in Southeast Asia, one of the world’s fastest growing regions, Indonesia plays an increasingly important role in global trade. It is also one of the world’s largest democracies, with the impressive task of governing a population that is culturally, religiously and linguistically diverse across a vast territory. Its experience of reaching consensus in the face of this diversity can yield important insights for the international community. Since it became a Key Partner of our Organisation in 2007, Indonesia has actively contributed to addressing common policy challenges and has enriched policy debates at the OECD. Through this collaboration, we are also learning a lot from the great cultural richness and policy-making complexity of large developing countries. Today, Indonesia takes part in six bodies, 12 legal instruments and a wide array of OECD reviews and databases. It was the first Key Partner to sign a Framework of Co-operation Agreement in 2012, and a Privileges and Immunities Agreement in 2013. Such engagement with Indonesia has helped to drive our work in Southeast Asia. The launch of the Southeast Asia Regional Programme in 2014, together with the creation of a Jakarta representative office in 2015, are testament to this. Over the past two years, Indonesia has pursued an ambitious reform agenda. It has taken important steps to boost public revenue, invest in infrastructure, enhance sub-national government and reduce poverty and inequality. It has managed to maintain solid macroeconomic fundamentals, increase investment and establish free primary education. Going forward, progress in these areas will remain high on the development agenda. Connectivity continues to be a major development constraint, and policymakers will need to find ways to crowd more private finance into infrastructure investment. Measures to decrease malnutrition among school-age children will be important to reduce poverty and inequality. Human resource development, particularly more and better vocational education and training, will be key to engaging in higher-value added activities, including via FDI. Most economic development strategies will depend on the government’s success at boosting public finances, and these in turn will hinge on the success of current efforts to increase tax revenue and integrity within the public administration. The OECD stands ready to support Indonesia in these endeavours and in achieving economic growth that is both inclusive and sustainable. This “Active with Indonesia” brochure highlights how the OECD and Indonesia have worked together to advance the country’s reform agenda, and how Indonesia’s participation in OECD activities has enriched our work and helped us find solutions to global challenges. We look forward to deepening this collaboration and continuing to work with Indonesia as it advances better policies for better lives. ÁNGEL GURRÍA, OECD Secretary-General CONTENTS Contents THE OECD AND INDONESIA 2 EMPLOYMENT AND SOCIAL DEVELOPMENT 40 History of OECD-Indonesia co-operation 4 Achieving universal health coverage 41 The OECD-Indonesia Joint Work Programme 7 Promoting gender equality 42 The Southeast Asia Regional Programme 8 Fostering skills through education and training 44 The OECD Jakarta Office 11 Tackling inequality 46 SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH 14 INDUSTRY AND INNOVATION 47 Maintaining economic growth and resilience 15 Building a knowledge economy 48 Supporting SME development 17 Harnessing digital technologies 49 Supporting green growth initiatives 18 Enhancing chemical safety 50 Promoting regional development and urbanisation 19 Biotechnology 50 Increasing agricultural productivity and food security 20 Boosting tourism 51 Promoting development co-operation and the 2030 Agenda 22 Better data for better policies 24 ENVIRONMENT AND ENERGY 52 Towards a cleaner and healthier environment 53 SMOOTH FUNCTIONING OF MARKETS 25 Combating climate change 54 Enhancing investment’s contribution to Biodiversity conservation and sustainable use 56 sustainable development 26 Strengthening global partnerships on clean energy Promoting trade and upgrading in global value chains 27 and energy efficiency 57 Promoting sound competition 29 Developing a robust financial system 30 ANNEXES 60 Strengthening connectivity, capital investment Overview of the OECD 60 and public-private partnerships 31 OECD legal instruments 62 Developing high-quality financial education 32 OECD bodies 63 Dialogue and data 63 PUBLIC AND CORPORATE GOVERNANCE 33 Implementing regulatory reform 34 Disseminating open government 35 Fighting transnational corruption 36 Towards a culture of integrity in Indonesia 37 Improving tax transparency and compliance 38 Raising the bar on corporate governance 39 CONTENTS . 1 THE OECD AND INDONESIA 2 . ACTIVE WITH INDONESIA THE OECD AND INDONESIA AND OECD THE HOW WE WORK TOGETHER THE OECD AND INDONESIA . 3 THE OECD AND INDONESIA An ever-growing partnership The OECD’s engagement with Indonesia has deepened Milestones in OECD-Indonesia collaboration include the significantly since 2007, when the country became one of the country’s decision to become a member of the OECD organisation’s five Key Partners. It was the first Key Partner Development Centre in 2009 and to join the OECD’s to sign both a Framework of Co-operation Agreement (2012) Multilateral Convention to Implement Tax Treaty Related and a Privileges and Immunity Agreement (2013) with the Measures to Prevent Base Erosion and Profit Shifting Organisation, and Indonesian ministers have regularly (BEPS) in 2017. Both signal Indonesia’s willingness to attended and substantively contributed to the OECD’s align more closely with OECD countries and to engage Ministerial Council Meetings since 2012. The establishment with them in a spirit of mutual learning. In this vein, of the OECD’s first Southeast Asian office in Jakarta in March Indonesia also adheres to 12 OECD legal instruments 2015 marked a further intensification of this relationship, and participates in nine OECD bodies as an Associate or with the office supporting the Organisation’s engagement Participant. The country is also integrated into a number with Indonesia and Southeast Asia, as well as a number of of flagship OECD publications as well as statistical regional organisations. databases. HIGHLIGHTS 2007 2009 2010 2012 2013 2014 Indonesia becomes Indonesia becomes OECD launches its first Indonesia becomes Indonesia becomes The OECD launches one of five Key the 34th member of the full Economic Survey the first Key Partner the first Key Partner to its Southeast Asia Partners of the OECD OECD’s Development of Indonesia to sign a Framework sign a Privileges and Regional Programme, through its Enhanced Centre and concludes of Co-operation Immunities Agreement with Indonesia as its Engagement a “statement of co- Agreement with the with the OECD Co-Chair Programme operation” with the OECD OECD’s Investment Committee 4 . ACTIVE WITH INDONESIA THE OECD AND INDONESIA AND OECD THE THE OECD AND INDONESIA An ever-growing partnership L The President of Indonesia, H.E. Mr Joko Widodo, and OECD Secretary-General, Angel Gurría during a visit to launch the 2017-18 OECD-Indonesia Joint Work Programme and the OECD Economic Survey of 2015 2016 2017 2017 2018 Indonesia in Jakarta, 2016. Minister of President of Indonesia Renewal of the Indonesia signs Minister of National Finance Bambang Joko Widodo and Framework of the OECD MLI on Development Brodjonegoro and the OECD Secretary Cooperation BEPS along with 71 Planning Bambang OECD Secretary General launch Agreement for a countries at the 2017 Brodjonegoro attends General Angel Gurria the second OECD- period of 5 years by OECD Ministerial the OECD MCM in inaugurate an OECD Indonesia JWP for Minister of Finance Council Meeting 2018 office in Jakarta 2017-2018, and the Sri Mulyani Indrawati (MCM) in Paris 2016 OECD Economic and OECD Secretary Survey of Indonesia General Angel Gurria THE OECD AND INDONESIA . 5 6 . ACTIVE WITH INDONESIA THE OECD AND INDONESIA AND OECD THE The OECD-Indonesia Joint Work Programme: A path for more structured co-operation OECD engagement with Indonesia is based on a Framework l ENVIRONMENT: The Green Growth Policy Review of Indonesia of Co-operation Agreement that was first signed in 2012 was initiated, which seeks to assess the extent to which and renewed in 2017 by the OECD Secretary General Angel Indonesia is mainstreaming environmental considerations Gurría and Minister of Finance of Indonesia, Sri Mulyani into its economic policy. A GGPR workshop was held in Jakarta Indrawati. It is structured around a Joint Work Programme in November 2017, which included a special session on the (JWP), which traditionally ran for two years but will run for OECD report Investing in Climate, Investing in Growth. three years starting from 2019. The JWP is developed in close consultation with key policy stakeholders in Indonesia as l SME POLICIES: An SME and Entrepreneurship Policy Review well as substantive OECD directorates, and is based on the of Indonesia was developed