August 14, 2023
JAKARTA – Indonesia is pushing to join the Organisation for Economic Co-operation and Development (OECD) after President Joko “Jokowi” Widodo welcomed an OECD delegation to the Presidential Palace on Thursday.
The President emphasized his desire for a seamless and swift path to Indonesian OECD membership.
Finance Minister Sri Mulyani Indrawati stated in a press conference on Thursday that Indonesia had officially expressed its interest in becoming a member of the Paris-based forum.
She said OECD secretary-general Mathias Cormann had outlined the necessary procedures for membership during the meeting with the President.
“The benefits of membership are significant, as [OECD membership] brings the potential to improve policy and bureaucracy in Indonesia,” Sri Mulyani emphasized.
At the press conference, Foreign Minister Retno L.P. Marsudi told the media that Indonesia’s bid for OECD membership had garnered strong support from existing member countries and would be discussed at a forthcoming OECD council meeting in September.
“If we secure the necessary political agreement [from current member countries], the technical process will be set in motion,” Retno explained.
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Highlighting the longstanding nature of Indonesia’s collaboration with the OECD, Retno pointed out that the country had been a key partner of the OECD since 2007. Notably, in 2015, the organization took a significant step by establishing its first Southeast Asian office in Jakarta.
Indonesia and the OECD have executed several cooperative programs, Sri Mulyani added, including economic surveys and policy assessments tailored to the country, all while adhering to OECD benchmarks akin to those used by existing member countries. These policy assessments covered various sectors, including state-owned enterprises (SOEs), taxation, capital movement, public procurement, anticorruption measures and environmental policies.
These efforts, according to the finance minister, were found to be in alignment with OECD membership criteria.
“We aren’t starting from scratch,” she asserted. “There have been many [policy] reforms [in Indonesia] that are in line with the OECD’s policy framework.”
The OECD expressed its recognition of the President’s leadership in chairing the Group of Twenty (G20) forum and in implementing reforms for investment and economic development. These measures were deemed highly relevant for the needs of the people, according to secretary-general Cormann, and contributed to the nation’s economic strength.
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Institute for Development of Economics and Finance (Indef) executive director Tauhid Ahmad underscored that Indonesia’s membership in the OECD would give the country high-income status but would not yield any immediate benefits.
“The OECD cannot offer grants, capital loans, financial aid or development resources,” Tauhid told The Jakarta Post on Friday, saying that the OECD’s functions differed from international financial institutions, which could provide direct and tangible assistance.
He further explained that the organization’s role would primarily involve offering guidance and recommendations to the government related to economic, financial and investment policies in the form of studies, research and meetings with relevant officials.
In other words, the membership primarily focused on aligning policy perceptions without involving any explicit commitments in trade, investment or developmental activities.
On the flip side, he pointed out that joining an organization comprised of developed nations would serve as a humbling experience, as Indonesia would undergo continuous evaluation and be directly compared to existing member countries.
“This can be beneficial, as it prevents us from becoming complacent with our current policies. They would closely examine key indicators like GDP and poverty rates, making comparisons with similar economic and financial markers from other member countries,” he elaborated, highlighting the possibility that Indonesia’s ranking might place it among the bottom five upon its entry.
Tauhid recommended that the government establish open trade agreements with other nations, which would have a direct impact on Indonesia’s economy.
“We open trade, and in response, other countries [reciprocate],” he argued. “What’s the point of entering [the OECD] merely for the sake of pride?”
The OECD is an intergovernmental organization with 38 member countries founded in 1961 to addresses various global challenges by facilitating discussions, providing policy recommendations and fostering collaboration among governments and stakeholders.
If Indonesia enters the organization, it will become the third Asian nation to do so after South Korea and Japan, and the first in Southeast Asia.