Member Fact Sheet, April 2022

ADB's Work in Indonesia   Download Fact Sheet

Indonesia was a founding member of the Asian Development Bank (ADB) in 1966. The country is ADB’s sixth largest shareholder and one of its largest sovereign borrowers. It has made remarkable development strides in the 21st century, including sustained economic growth and significant reductions in poverty. Indonesia became a G20 member in 2008 and assumes the group’s presidency in 2022.

The country’s progress is, however, under constraint due to the impacts of a prolonged coronavirus disease (COVID-19) pandemic. In the near and medium terms, it will be critical to continue to contain the pandemic, support economic recovery, and implement domestic reforms. Indonesia must overcome various development challenges including tackling human development constraints, enhancing economic competitiveness, and managing the risk posed by climate change and disasters, and achieving environmental sustainability.

To date, ADB has committed 820 public sector loans, grants, and technical assistance totaling $42 billion to Indonesia. Cumulative loan and grant disbursements to Indonesia amount to $34.87 billion. These were financed by regular and concessional ordinary capital resources, and other special funds. ADB’s ongoing sovereign portfolio in Indonesia includes 20 loans worth $6.78 billion.

In September, ADB approved a $79.48 million loan to boost Indonesia’s innovation capacity and global competitiveness amid the fourth industrial revolution. It will develop academic and innovation centers at the Institut Teknologi Sepuluh Nopember, as well as a teaching hospital and a health and life sciences research center at the Universitas Lampung.

In October, ADB approved a $500 million policy-based loan to support Indonesia’s ongoing reforms that have made it easier to start a business, attract foreign direct investment in manufacturing, and simplify land-related transactions to investors. The program also aims to help improve logistics services, facilitate trade, create jobs, and provide incentives for firms to adopt new technologies and upgrade worker skills.

In November, ADB approved a $500 million policy-based loan to help Indonesia improve human capital and increase labor productivity. The program will also support key reforms to enhance education and skills training, boost employment among youth, expand the social safety net, and reduce childhood stunting.

In December, ADB approved a $600 million results-based loan guaranteed by the sovereign to help state-owned power company PT PLN (Persero) rehabilitate, strengthen, and expand power grid in five provinces. It will also assist the company to promote clean energy use as well as improve the company’s waste and asset management, procurement, and community education.

Restructured and reformed, Indonesia's SOEs can deliver much greater value. Photo: ADB

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Indonesia as of 31 December 2021 was $1.27 billion representing 9.06% of ADB’s total private sector portfolio.

Operational challenges. Prolonged movement restrictions and economic slowdown from the pandemic continue to affect ADB project processing and implementation. To address the challenges, ADB is making greater use of technology, such as remote sensing and satellite imagery, and deploying more local consultants in the field.

Project implementation also faces systemic challenges, such as delayed work planning and budgeting, prolonged detailed engineering design and procurement processes, and delayed approval for resettlement plans and environmental permits. ADB and the government are discussing project readiness criteria for the ADB pipelines so that technical, procurement, and safeguards requirements prepared in advance. ADB also supports the government in increasing project readiness through technical assistance and capacity building activities to reduce systematic issues on project implementation.

COVID-19 Response

ADB approved $2.12 billion in sovereign loans and grants to Indonesia in 2021. In March 2021, it approved a $450 million loan to help PT Bio Farma (Persero), a state-owned vaccine supplier, procure and deliver safe and effective vaccines against COVID-19. ADB also helps the government and Bio Farma improve vaccine logistics management.

Knowledge Work

ADB’s approach to knowledge operations in Indonesia seeks to inform and deliver on its strategy through policy dialogue, analysis and monitoring, knowledge products, and capacity building.

The annual Indonesia-ADB High-Level Policy Dialogue provides strategic guidance to ADB’s support to the government’s priorities. Joint activities in 2021, including the International Climate Change Conference in July, the Annual International Forum on Economic Development in December, and the Indonesia Development Talks webinar series helped stakeholders explore policy initiatives to accelerate economic recovery.

ADB actively partners with a wide range of institutions to amplify its knowledge. Throughout 2021, ADB collaborated with Universitas Indonesia, Institute Technology of Bandung, and University of Diponegoro on knowledge dissemination including through joint seminars.