Canadian international assistance in Indonesia
As the fourth most populous country and the third largest democracy, Indonesia has experienced strong and sustained economic growth that has created jobs and increased public expenditures on health, education and infrastructure. However, significant poverty persists, particularly in Eastern Indonesia, and approximately 40% of Indonesia’s population lives on less than US$2 a day and remains vulnerable to economic shocks. While Indonesia is one of the world’s top biodiversity nations, it is among the highest emitters of greenhouse gases, and is vulnerable to climate change and natural disasters.
The majority of poor Indonesians still live in rural areas. Some 35% of Indonesians depend on agriculture for their incomes. Indonesia ranks 113 out of 188 countries on the United Nations Development Programme's 2016 Human Development Index.
Gender equality is a significant challenge, with violence against women and girls, high rates of early and child marriage linked to the country’s high maternal mortality rate. Women continue to be concentrated in low wage, low value segments of the economy with limited access to financial resources.
Indonesia, a relatively new but vibrant multi-party democracy, has held several peaceful and legitimate elections since it emerged from authoritarian rule in 1998. A key feature of Indonesia’s democratic system is the decentralization of significant powers from the centre to the 33 provinces and 497 districts.
Decentralization reforms have outpaced the capacity of local governments to deliver social services, which remain inadequate by middle-income country standards.
The private sector plays a dominant role in the Indonesian economy. The formal economy largely comprises business conglomerates, state-owned enterprises and foreign investors (primarily in the extractives sector).
An estimated 70% of Indonesia’s private sector belongs to the informal sector, which is characterized by a large number of micro, small and medium-sized enterprises. Women account for 65% of the informal economy.
As a member of ASEAN and APEC, and the only Southeast Asian member of the G-20, Indonesia plays a key role in regional stability in Southeast Asia.
Our international development assistance
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The Government of Indonesia has outlined a number of development priorities in its National Medium Term Development Plan 2015-2019 and other important policy documents. These priorities include:
- Development for human beings and community
- Increased welfare, prosperity, productivity without widening income gaps
- Increased productivity of middle-lower income segments
- Development that increases environmental sustainability
Building economic foundations
Canada will support governments in order to help them:
- stimulate economic development by implementing national policies for local and regional economic development
- generate and manage revenue through taxation and royalties
- procure goods and services
- manage public finances in a transparent and gender-responsive manner
- reduce trade and investment barriers
We will also explore opportunities to support the regulatory environment for public-private partnerships and women’s economic empowerment. That includes supporting the provision of technical assistance to establish and apply policy on the use of natural resources, both non-renewable and renewable.
Key anticipated results:
- Improved capacity of governments to strengthen legal and regulatory frameworks, systems and implementation aimed at creating stable national and local economies
- Strengthened gender-responsive public sector financial and management capacity at the local, regional and national levels
- Increased capacity of local, regional and national institutions to manage natural resources sustainably and responsibly
Investing in people
Indonesia’s population is young and growing: currently one in four Indonesians is 15 years of age, or younger. While this demographic dividend will yield a healthy labour supply in the future, there is currently a shortage of qualified workers within the private sector. Canada’s support will enhance the capacity of educational institutions to meet labour market demands, as defined following consultations involving the Government of Indonesia and private sector actors.
Key anticipated results:
- Increased access to essential demand-driven skills training and knowledge needed for formal labour market participation
- Increased availability of appropriate, meaningful and structured workplace learning opportunities
- Results-based learning initiatives that support business growth, market expansion and productivity
Canada’s long-standing support to Indonesia’s democratic development provides a unique niche for programming in the areas of religious pluralism and public-sector reform. Canada will support Indonesia’s objectives to further advance democracy by:
- championing a more equitable and inclusive democratic society served by strong public sector institutions where citizens, including religious minorities, can exercise their human rights
- strengthening the capacity of the public sector, including institutions that advance democratic processes
Progress on aid effectiveness
Given that Indonesia is a lower-middle income country, the Government of Indonesia views foreign assistance as a partnership between equals. This was defined in the 2009 Jakarta Commitment, a country-specific aid effectiveness action plan signed by the Government of Indonesia and all donors, including Canada.
The donors committed to aligning their programming with the development priorities of the Government of Indonesia, as defined in the National Medium-Term Development Plan (2015-2019) and the Master Plan for Economic Development (2011-2025).The main elements of the Jakarta Commitment are:
- strengthening local ownership
- building more effective and inclusive partnerships
- delivering and accounting for results
- The Southeast Asia Regional Program
- Embassy of Canada to Indonesia, Timor-Leste and the Association of Southeast Asian Nations (ASEAN)
- Canadian Representatives Abroad
- 2015 Human Development Index
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