International development cooperation has the goal to come closer to the ideal of a world without poverty, conflicts and ecological destruction. It is not only the responsibility of a single country, but the global community, to deal with these problems of today. In the framework of its development policy, the German government supports the world community in achieving these goals, also called SDGs (Sustainable Development Goals).
Indonesia is not just a reliable bilateral partner of German development cooperation. As a G-20 member state and emerging country, it has also become an increasingly important regional and international player in that field. Among others, Indonesia’s further development is crucial for the SDGs –especially the goal of sustainable climate protection–to be achieved.In the latest government-to-government (G2G) negotiations in 2017, a new amount of €158.5 million has been committed for bilateral cooperation; €126.5 million thereof for financial cooperation (FC) realized by the German development bank KfW and €32 million for technical cooperation to be implemented by GIZ, BGR and PTB. Government-to-government consultations were held in January 2019, the next government-to-government negotiations will be held again in September 2019.
In the framework of the latest negotiations in 2017, the following priority areas of cooperation were determined:
Although demand for electricity in the country steadily grows the next few years, Indonesia’s energy sector continues to face numerous challenges. Electrification rate remains one of the lowest in the region, leaving over 22 million people without access to electricity, and electricity production is still mainly based on fossil resources. One area of action in Germany’s strategic partnership with Indonesia is greater use of renewable energy, which would lead to a reduction in emissions detrimental to the global climate. On this basis, Germany provides support for the utilization of renewable energies such a solar, wind and geothermal energy, particularly in remote regions of Indonesia. Also in development are projects to bring electrification to remote islands in the archipelago and to increase energy efficiency.
Indonesia plays an important role in the protection of global environmental goods such as global climate and biodiversity, not least because of its huge forest areas. Since a large proportion of greenhouse gas emission is released as a result of the destruction of tropical forests, Germany provides assistance to the Indonesian government in implementing forestry reforms that facilitate sustainable forest management such as through the establishment of social forests. Within this priority area, Germany also provides advisory services to the Indonesian government on how to adjust its climate change mitigation policy and how to implement climate action plans. New projects aim to support national reform towards sustainable agriculture value chains and peatland management and Rehabilitation.
Over the last decade, Indonesia’s per capita income has doubled, its middle class population has significantly grown, and its poverty rate has been slashed by one third. Indonesia owes this to the “demographic bonus” that it currently experiences, as the majority of its population enter their productive age. Even so, many Indonesian young people face difficulties in finding employment while at the same time industries suffer from a shortage of skilled labour. At the same time, Indonesia faces a large inequality gap and high social vulnerability owing to insufficient social security systems. These challenges leave open the risk that Indonesia’s economic growth will slow down and that poverty for a large part of the population will further grow.
Germany supports Indonesia in its efforts to shape the country's economic development in a way that is sustainable and inclusive by providing support towards the promotion of sustainable and inclusive business models, technical and vocational education and training (TVET) reform initiated by Indonesia to increase the number of well-trained skilled workers, and implementation of the social protection Programme.
Outside of these priority areas, the areas of Good Governance and Private Sector Participation are attended as cross-cutting issues. Specifically, Germany is supporting measures to increase government revenue and to fight corruption.