Indonesia, emerging aid donor

Indonesia, emerging aid donor
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David Hatch

Since rising powers like Indonesia will one day run the world, argues the American political scientist George Friedman, they can save trouble later by reducing poverty in other developing countries now. To this end, Indonesia is commencing its own 'pivot' from a foreign aid recipient to an emerging exporter of development assistance.

By its own estimates, Indonesia has provided approximately US$42 million of foreign assistance over the past ten years. In addition to technical cooperation, Indonesia has provided more than US$7 million in humanitarian assistance in the past two years alone. Indonesia extended aid to Japan after the 2011 earthquake and tsunami , to Australia following the Queensland floods, to New Zealand after the Christchurch earthquake, as well as to Haiti, Pakistan, Turkey and others. Within ASEAN, Indonesia also recently provided a combined US$3.1 million of grants to six flood-affected countries.

These initial sums could eventually prove to be the groundwork for Indonesia to become a member of the OECD and its Development Assistance Committee.

At present, an inter-ministerial team is finalising a grand design for Indonesia's South-South Cooperation through to 2025. Donor countries (Indonesia's development partners) have a unique opportunity to help shape the future direction of Indonesia's provision of foreign aid. To be effective, development partners will need to engage with Indonesia on equal terms on areas of mutual interest, such as the provision of assistance in the region, to countries such as Myanmar.

A recent example of Indonesia's desire to play more of a leadership role in South-South and Triangular Cooperation was its hosting this month of a high-level forum on knowledge exchange involving more than 300 policy-makers and practitioners from 46 countries. To further signal to its commitment on South-South and Triangular Cooperation, Indonesia also agreed to contribute $1.5 million to the World Bank's South-South Exchange Facility, a multi-donor trust fund executed by the World Bank Institute.

As Indonesia increasingly provides foreign assistance to other countries, development partners that provide aid to Indonesia will need to change the way they operate. Realistically, Indonesia will likely receive less publicly-funded foreign assistance from traditional donors. Yet the targeted provision of small amounts of resources and focused interventions — for example staff exchanges, triangular cooperation, etc — can have a huge impact.

What are the benefits for traditional donors of partnering with Indonesia as its sets its future direction for foreign assistance? Indonesia's South-South & Triangular Cooperation policy could be a pragmatic way for a Jakarta to realise some of its broader foreign policy goals, such as promoting democracy and Indonesia's democratic image (including to the Muslim world), community-driven disaster mitigation, and the promotion of regional integration, peace and stability. Many of these goals are shared among the development partners. Indonesia could also become a spokesperson for G20 developing countries, act as an interlocutor in the dialogue between the Muslim world and the West, and serve as a peace-broker in international conflicts.

Indonesia will also start to look more critically at its own development achievements, thereby spurring increased efforts within Indonesia to address inequality, improve its own people’s lives, and to extend the freedoms deriving from Indonesia's democratic transition to more of the population. While the future funding that Indonesia plans to provide is unclear, what's important is the transparent steps Indonesia is taking.

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