International development cooperation has the goal to come closer to the ideal of a world without poverty, conflicts and ecological destruction. Not only a single country, but the world community has 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 only a reliable bilateral partner of German development cooperation but –as a G20 member state and emerging country- is becoming an increasingly important regional and international player in that field. Among others, Indonesia’s further development is crucial for the SDGs –especially for the goal of sustainable climate protection- to be achieved. Therefore, trilateral cooperation and the link of bilateral and regional projects play an important role.
Between 2010 and 2012, Germany committed the amount of € 520 mio. to Indonesia. In the latest government-to-government negotiations in 2013, further € 50.5 mio. were committed for bilateral cooperation, € 7 mio. thereof for financial cooperation (FC) realized by the German development bank KfW and € 43.5 mio. for technical cooperation (TC) to be implemented by GIZ. In 2014, another € 175 mio. of FC were committed. Government-to-government negotiations will be held again in 2015.
In the framework of the latest negotiations, the following key areas of cooperation were determined:
Indonesia plays an important role in the protection of global environmental goods such as global climate and the protection of biodiversity. Securing sustainable development especially means the utilization of natural resources, more sustainable and climate-protective energy supply as well as modern infrastructure. Thus, development priorities adapted to Indonesia’s needs focus on the following areas: forestry, biodiversity, infrastructure, energy and climate policy consulting.
Forestry and biodiversity: Besides a generally growing pressure on natural resources (forests) land-use conflicts are adding up. Therefore, climate-protective land use (protection of resources vs. economic use of natural resources), the setup of a solid forest management and innovative financial approaches for forestry programs are in the focus of German development cooperation in that area. In addition to already existing programs in Kalimantan and Sumatra a new project in central Sulawesi will start soon.
Infrastructure: An efficient and environmentally friendly infrastructure is the key to sustainable development. Especially Indonesia faces immense challenges in this respect with effect on economic performance, quality of life as well as health of the population. Approx. 50% of the population lives in urban centers responsible for a significant part of the country’s greenhouse gas emissions. Shaping urbanization e.g. through better waste management and a more efficient transport infrastructure is in the focus of Indonesian growth strategies. To support Indonesia in that approach, German development cooperation concentrates among others on the promotion of climate-protective and environmentally friendly strategies and technologies. Therefore, we advise selected cities regarding a more climate-protective transport infrastructure or offer financing of investments in modern waste management.
Energy: In the next years Indonesia’s energy sector is facing numerous challenges. On the one hand, the demand for electricity is steadily growing (approx. 8% every year). At the same time, electricity production is still mainly based on fossil resources and the electrification rate is one of the lowest in the region. On the other hand, efficiency is that low due to high government subsidies in the sector. Thus, it is crucial to increase efficiency, to further develop renewable energy (hydropower, geothermal and bio energy) as well as to secure sustainable supply and comprehensive access to electricity. Focal points of German development cooperation in this area are advice to design a future market with relevant stakeholders, an adequate energy policy as well as to plan, finance, manage and monitor investments in the sector.
Climate change policy: Indonesia – one of the largest emitter of greenhouse gases - is committed to mitigate CO2 emissions significantly and constructively supports approaches for an international climate change agreement on a multilateral basis. Therefore, German development cooperation is concentrated on the implementation of measures (esp. the support of National Mitigation Action programs, so-called NAMAs) in provinces and cities as well as on the inclusion of the private sector and the sensitization of the public to reach Indonesia’s climate change goals.
For more information see the factsheet.
Indonesia’s economic success is regularly endangered by inadequate governance. Thus, already the last government declared anti-corruption and administrative reforms priority areas of their policy. The new government is expected to continue and even increase these efforts. Challenges towards a modern democracy for Indonesia are the administrative reform, fight against corruption as well as the reform of the judicial system and the police. Overall Indonesia reveals relatively bad governance indicators for an emerging country. This especially applies to the Corruption Perception Index of Transparency International and the Doing Business Index of the Worldbank.
German development cooperation is concentrated on the following Areas:
Administrative Reform: The support of key actors in the field of reform of the public sector with the objective to design a more effective, efficient, accountable and citizen-friendly administration and to spread innovative service concepts in cooperation with the international level (OECD, ASEAN). The project is called TRANSFORMASI.
Fight against corruption: To strengthen the Indonesian Anti-Corruption Commission (KPK) with the objective to implement preventive measures against corruption via the introduction of a national integrity management system, the setup of an Anti-Corruption Learning Center and the establishment of instruments to fight corruption.
Women’s Rights: The cooperation between the Indonesian Ministry of Supporting Women and the Protection of Children’s Rights in the field of the development of national and local policies, programs and capacities to establish a basis for the reduction of structural disadvantages for women.
Strengthening Structures and Capacities for International Cooperation: Only started mid of 2014, the focus in this area is to consult institutions involved in international cooperation in order to optimize their performance as a regional and global development cooperation partner. Advice comprises the strengthening of capacities for South-South and Triangular cooperation, the planning and implementation of sustainable triangular projects and the setup and management of networks for global governance. An intense cooperation with global projects exists.
For more information see the factsheet.
During the last ten years, the per capita income in Indonesia has doubled, the middle class has grown significantly and the poverty rate has been reduced by one third. At the same time, Indonesia is still facing a lot of challenges and risks. Among others the still too low educational level, the poor diversification and depth of processing in the Indonesian economy and a high dependence on exports –of mainly unprocessed- raw materials, the structurally under-developed infrastructure, the high and increasing income inequality as well as the high social vulnerability owing to insufficient social security systems have to be mentioned. These developments bear the risk that Indonesia’s further economic growth will slow down (middle-income trap), that the risk of poverty for a large part of the population will further grow. Furthermore, the social cohesion and stability are at risk.
Sustainable Growth & Investments: The program for sustainable regional economic growth and investments (SREGIP) in close cooperation with the private and public sector supports the inclusive and ecologically sustainable development of value chains –in agro-business and tourism- focusing on two pilot regions in West Kalimantan and West Nusa Tenggara. Apart from improving the business and investment climate and public support strategies, the project aims at the development of company services and the utilization of adapted technologies with the objective to increase the efficiency and ecological sustainability of 100 small and medium-sized enterprises (SMEs) and 5,000 farmers and to improve inclusive growth in selected value chains. On a national level, the German economic cooperation supports the implementation of the (Indonesian) government’s reform agenda (i) to improve the investment climate, (ii) to improve the possibilities for financing infrastructure investments and (iii) to accelerate and increase the transparency of state procurement. With other development partners German development cooperation is engaged in a high-volume financing program supported by an occasional consultancy service.
Vocational training: The programs implemented by TC and FC focus on the improvement of employability of persons graduated from vocational training centers as well as employees in selected regions of Indonesia. The project supports the Indonesian Ministries of Education, Industry and Public Works, local governments, 23 selected vocational centers as well as numerous German, international and Indonesian enterprises to improve the quality and practical approach of their education as well as the management in the sector of vocational training. Apart from advice and qualification, the support comprises equipment as well as technical training for teachers. The private sector plays a significant role in this program which is aimed at strengthening the economic part in the framework of vocational training.
Social Security: German development cooperation supports the Indonesian Ministry of Planning (BAPPENAS) and the Council for Social Security implementing a contributory health insurance system set up on 1st of January, 2014 which should cover all Indonesia by 2019. This is closely related to the financing of health infrastructure (reference system for hospitals and health centers including modern equipment) in selected provinces (starting with Aceh) in order to enhance health services. Furthermore, the Indonesian Ministry of Social Affairs is supported to enhance the social security system to 3.2 mio. entitled families and to design the management of financial means in a more efficient way. In addition the program contributes to the inclusion of handicapped people in the social security system as well as the improvement of their access to vocational training and the labor market.
For more information see the factsheet.