Meeting Indonesia's Changing Development Needs | Asian Development Bank

Meeting Indonesia's Changing Development Needs

Article | 29 August 2018

Indonesia's development needs and strategy are evolving as it gears up to become a high-income country. The Asian Development Bank is responding to these changes through an assistance program focusing on infrastructure, human capital development, and economic governance, says ADB's Indonesia Country Director Winfried Wicklein.

Indonesia is Southeast Asia's largest economy and the 16th largest in the world. Rapid economic growth over the past decade has helped lift more than 10 million Indonesians out of poverty.

As Indonesia gears up to become a high-income country, assistance from the Asian Development Bank is adapting to the country’s changing needs. Indonesia Country Director Winfried Wicklein shares ADB's partnership and development strategy with Indonesia.

What is Indonesia's current economic situation?

Indonesia has made tremendous progress over the last couple of decades in terms of its development. It is now a middle-income country, poverty rates have gone down to quite an impressive 11% but challenges remain.

Agricultural productivity is very low, transport logistics costs are very high, access to energy is quite low still. So there’s still a long way to go.

How is ADB assisting Indonesia's development?

We are working very strongly in infrastructure, human resource development, and on economic governance.

Our assistance to Indonesia has evolved over time. In the '70s, we started very heavily focused on agriculture. In the '80s, we went into infrastructure sectors such as transport and energy. In the '90s, we started working on reforms. Then the financial crisis hit, and then another crisis - the tsunami in 2004 - during which time we provided crisis support.

Nowadays, we are working very strongly in infrastructure, human resource development, and economic governance.

What is ADB doing to stimulate private sector development?

The government estimates that the infrastructure deficit is about $400 billion for the next 5 years. So, in order to help the government fill that gap, we have to help mobilize private sector finance.

We are working in three ways supporting Indonesia’s private sector development. Firstly, by helping the country build an enabling business environment. Secondly, we are working directly with private sector sponsors on commercially viable projects with development effects. Thirdly, we are working on a public-private partnership program.

How will ADB assistance to Indonesia evolve in the future?

We have to work smarter and think more innovatively on how to support Indonesia with innovative funding mechanisms.

 We have to work smarter and think more innovatively on how to support Indonesia with innovative funding mechanisms.

For instance, ADB is providing technical assistance to help Indonesia think through the implications of the fourth industrial revolution - the digital transformation - including how to gear up to maximize the benefits for Indonesia and to reduce potential risks.

These are very challenging and exciting times for Indonesia and ADB is looking forward to continuing its support throughout this journey.