Leslie Massey
Indonesia is the largest recipient of Australian aid, and Australia is the fourth-largest donor of foreign aid to Indonesia. The two countries are close neighbours, strategic partners, and friends, and Australia sees Indonesia's success as pivotal to the success of the region. The overarching goal of the Australia-Indonesia development partnership is to promote Indonesia's prosperity, stability, and resilience, and to build strong links between the two countries. Australia has provided aid to Indonesia in the form of relief aid after natural disasters, such as the 2004 tsunami, and through development programs that focus on areas such as economic growth, trade, security, and education.
| Characteristics | Values |
|---|---|
| Reason for aid | Indonesia is Australia's closest neighbour and a strategic partner. |
| Australia's goal | Promote Indonesia's prosperity, stability, and resilience, and build strong links between the two countries. |
| Australia's aid history | Australia has been providing development aid to Indonesia since 1953. |
| Recent aid | Australia pledged $5.5 million in relief aid to Indonesia after a devastating earthquake and tsunami in 2018. |
| Previous large aid package | Australia provided $1 billion for Indonesia's recovery and reconstruction after the 2004 Boxing Day Tsunami. |
| Australia's aid budget | 0.74% of the federal government's budget is spent on foreign aid. |
| Indonesia's aid spending | Australia's development assistance represents less than 0.3% of Indonesian government revenue. |
| Indonesia's development plan | Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN) focuses on good governance, improved productivity, and human resource quality. |
| Australia's support | Australia supports Indonesia's economic growth, trade, security, development, and education. |
| Indonesia's challenges | Indonesia faces challenges such as maternal mortality, child stunting, and poor literacy and numeracy. |
| Indonesia's vulnerability | Indonesia is vulnerable to climate change impacts due to its high population density in hazard-prone areas and dependence on natural resources. |
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What You'll Learn
Disaster relief and recovery
Australia and Indonesia have a long history of cooperation and mutual support during times of crisis. Given their close proximity, it is natural that these two countries would offer assistance to each other when disaster strikes. Australia has provided significant financial support to Indonesia for disaster relief and recovery efforts over the years, and this aid has played a crucial role in helping Indonesia cope with the impact of natural disasters and other emergencies.
One of the primary reasons for Australia's financial contributions is the frequent occurrence of natural disasters in Indonesia. The archipelago's location along the Pacific Ring of Fire makes it prone to earthquakes, volcanic eruptions, and tsunamis. Australia, therefore, stands ready to provide monetary assistance to help Indonesia recover from these devastating events. For example, in 2018, Australia donated $5 million to support the recovery efforts following the devastating Sulawesi earthquake and tsunami that claimed over 2,000 lives and left thousands more injured and displaced.
In addition to earthquakes and tsunamis, Indonesia is also susceptible to other natural disasters such as floods, landslides, and wildfires. Australia has consistently offered financial aid to help Indonesia cope with these challenges. In 2019, Australia provided $1 million to support Indonesia's response to widespread flooding and landslides in Papua and North Maluku provinces. This funding helped provide essential relief items, shelter, and healthcare to those affected by the disasters.
The Australian government and charities also played a significant role in the recovery process following the 2018 Sunda Strait tsunami, which was caused by a volcanic eruption. Australia's contribution of $2 million helped provide immediate life-saving assistance, including emergency shelter, food, and healthcare, to the affected communities. Australian aid organizations also worked closely with local partners to support the longer-term recovery, focusing on rebuilding livelihoods and community infrastructure.
Beyond natural disasters, Australia has also provided financial support to Indonesia during other crises. For instance, in 2005, Australia contributed significantly to Indonesia's bird flu outbreak response, helping to strengthen the country's health systems and prevent the further spread of the disease. This assistance included providing medical equipment and expertise, as well as helping to develop surveillance and response systems to detect and manage future outbreaks.
In summary, Australia's financial contributions to Indonesia for disaster relief and recovery efforts reflect the strong relationship between the two countries and their commitment to supporting each other in times of need. Australia's aid has consistently helped Indonesia rebuild and recover from natural disasters, and it continues to play a vital role in strengthening Indonesia's resilience and ability to respond to future crises. The cooperation between these nations during challenging times is a testament to their shared values and the enduring friendship between their peoples.
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Economic growth and stability
Australia and Indonesia are close neighbours, strategic partners, and friends. Their bilateral relationship is underpinned by strong institutional and people-to-people links. Indonesia is Australia's 12th-largest trading partner, and its location, geography, and demography give it an important geopolitical and strategic role in the region.
Indonesia's success is seen as pivotal to the success of the region. The overarching goal of the Australia-Indonesia Development Partnership Plan 2024-2028 (DPP) is to promote Indonesia's prosperity, stability, and resilience, and to build strong links between the two countries.
Indonesia's economic growth is slowing, and inequality is rising. While it is a middle-income economy, structural bottlenecks to growth and social inclusion remain. Slowing growth will make it challenging for Indonesia to graduate from middle-income status by 2025 and to tackle poverty and increasing inequality. Australia supports Indonesia's efforts to address these issues and to distribute the benefits of growth to a larger number of its people.
Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN) sets out the government's vision and priorities for the country. Australia's Aid Investment Plan 2015/16-2018/19 aligns with the RPJMN's nine priority areas, including good governance, improved productivity and competitiveness, human resource quality, and self-sufficiency.
Australia supports Indonesia to boost inclusive growth and productive jobs through its public policy and regulatory settings. This includes supporting financial sector stability, revenue mobilization, improved government spending, and tax collection. Australia also helps address disincentives to infrastructure investment through technical assistance and policy advice on regulatory provisions, planning, and evaluation.
Indonesia's high population density in hazard-prone areas and dependence on a natural resource-based economy make it highly vulnerable to climate change impacts. Australia's development program supports Indonesia's transition to renewable energy and helps prepare for climate-related disasters.
In summary, Australia's economic growth and stability are closely tied to Indonesia's. By supporting Indonesia's economic development and addressing shared challenges, Australia contributes to regional growth and stability while also advancing its strategic objectives and mutual prosperity.
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Infrastructure development
Australia provides foreign aid to Indonesia to support its economic growth, human development, and stability and inclusion. Despite making progress over the past decade, Indonesia faces challenges such as slowing economic growth, rising inequality, and structural bottlenecks to growth and social inclusion.
Australia's aid program in Indonesia is structured around three main objectives: improving economic institutions and infrastructure, human development, and stability and inclusion. Australia supports Indonesia in addressing its infrastructure deficit, which is a bottleneck to growth, by providing technical assistance and policy advice on regulatory provisions, planning, and evaluation. This includes support in areas such as financial sector stability, revenue mobilization, improved government spending, and tax collection.
Indonesia's infrastructure development is aligned with Australia's strategic economic cooperation goals under the Australia-Indonesia Comprehensive Strategic Partnership. This partnership aims to promote peace and stability in the Indo-Pacific region and strengthen economic ties between the two countries.
In addition to economic infrastructure, Australia also supports human development in Indonesia. This includes addressing issues such as maternal mortality, child stunting, and poor literacy and numeracy, which limit the productivity of Indonesia's workforce. Australia provides scholarships and promotes participation from various regions within Indonesia to develop human capital and create conditions for higher growth.
Australia's aid program has evolved from a traditional donor-recipient relationship to a broader economic partnership. Australia is committed to working with Indonesia to achieve better results from its substantial infrastructure spending, rather than directly building infrastructure through grant funding. This rebalancing reflects Indonesia's successful development trajectory and the shared goal of promoting inclusive growth and productive jobs.
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Human development and social inclusion
Australia and Indonesia are close neighbours, strategic partners, and friends. The Australia-Indonesia Comprehensive Strategic Partnership sets an ambitious agenda for deeper and broader cooperation. The overarching goal for the Australia-Indonesia development partnership is to promote Indonesia's prosperity, stability, and resilience, and build strong links between the two countries.
Indonesia's success is seen as pivotal to the success of the region. Australia will support Indonesia's human development and service delivery efforts, promoting transparent and effective governance, and assisting Indonesia's ambition for vulnerable groups to access services safely and share in economic growth.
Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN) is part of the country's National Long-Term Plan 2005-2025 and sets out the Government's vision and priorities for the country. Australia's Aid Investment Plan 2015/16-2018/19 will align with the RPJMN priorities.
Indonesia needs to drive the development of human capital to create the conditions for higher growth. Australia will support Indonesia's efforts to address acute problems such as maternal mortality, child stunting, and poor literacy and numeracy, which limit the productivity of its workforce. Australia Awards Scholarships deliver considerable educational dividends for Indonesia's future leaders and valuable people-to-people linkages.
Indonesia's high population density in hazard-prone areas and dependence on a natural resource-based economy make it highly vulnerable to climate change impacts. The risks of food insecurity, coastal population displacement, and damage to the economy may compound and cascade to intensify and extend these effects. Australia will partner with Indonesia to prepare for climate-related disasters, natural disasters, and threats to human and animal health.
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Climate change resilience
Australia and Indonesia have a broad partnership that includes economic and development cooperation. Indonesia is Australia's 12th-largest trading partner, and its location, geography, and demography give it an important geopolitical and strategic role in the region. Sustainable and inclusive economic growth in Indonesia benefits Australia and contributes to regional growth and stability.
Indonesia is one of the most climate-vulnerable nations in the world. Over 42 million people in Indonesia live on low-lying land less than 10 meters above sea level, and over 2,000 of its islands will be submerged by 2050. Close to 6 million people will be displaced by annual flooding by the end of the century. At the international level, Indonesia has committed to reducing greenhouse gas emissions by 32% by 2030, or, with international assistance, 43%. Its long-term strategy is to reach net-zero emissions by 2060 or sooner.
Recognizing these challenges, the Australian government has sought to reframe its relations with Indonesia on issues of greater mutual benefit, with a shift towards "economic diplomacy". Addressing climate change over the long term with Indonesia is in Australia’s interests if the economic diplomacy model of relations is to persist.
Indonesia and Australia have strengthened their energy cooperation to meet these challenges through the Kemitraan untuk Iklim, Energi Terbarukan dan Infrastruktur (KINETIK) program, which aims to increase investment in energy transition by supporting policy and regulatory reforms in Indonesia. The Australian Government has allocated a USD 200 million grant for the KINETIK program, focusing on mutually reinforcing pillars. KINETIK aims to enhance access to financing for small and medium-sized enterprises focusing on climate through Australian Development Investments and incentivize investments in large-scale green infrastructure projects.
Indonesia and Australia also cooperate on climate change through mangrove and coral reef conservation. Both countries are among those with the largest mangrove areas globally, with Indonesia ranking first and Australia fifth. Mangrove management is an ideal area for the countries to share knowledge in best practices for protecting and restoring the health of these ecosystems. Coral reefs are often called “rainforests of the sea” due to their ability to sustain more than a quarter of marine animal species and absorb CO2. Indonesia is already a member of the Coral Triangle Initiative, and Australia boasts tremendous coral reef systems.
In addition, both countries have made a strong commitment to tackle illegal, unreported, and unregulated fishing, and there is potential for partnership in the manufacture of EV batteries, with Australia's abundant sources of lithium and Indonesia's rich deposits of nickel.
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Frequently asked questions
Australia and Indonesia are close neighbours, strategic partners, and friends. Australia sees Indonesia's success as pivotal to the success of the region. The overarching goal for the Australia-Indonesia development partnership is to promote Indonesia's prosperity, stability, and resilience, and build strong links between the two countries.
Australia is the fourth-largest donor of foreign aid to Indonesia. In 2015, the Australian government slashed aid funding to Indonesia by 40%. In the last financial year, Indonesia received $359 million in Australian aid. In 2018, Australia pledged $5.5 million in relief aid to Indonesia after an earthquake and tsunami.
According to DFAT's report on Indonesian aid spending, the key objectives of the aid include effective economic institutions and infrastructure, human development, and effective governance. Australia's development assistance represents less than 0.3% of Indonesian government revenue.
Australian development aid to Indonesia dates back to 1953 with Indonesia's participation in the Colombo Plan. More recently, in 2004, Australia gave $60 million in the first week after the Boxing Day Tsunami and later announced a $1 billion package for Indonesia's recovery and reconstruction.
Australia's aid to Indonesia helps to strengthen trade and investment ties under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). It also contributes to regional growth and stability, promotes peace and stability across the Indo-Pacific region, and supports Indonesia's transition to net zero.
