Indonesia to begin OECD accession talks

Indonesia is set to start holding accession talks with the Organization for Economic Cooperation and Development, which would see it become the fourth Asian nation to join the group.

Analysts in Indonesia have responded with cautious optimism, pointing to the daunting and timeconsuming tasks the country will have to do to harmonize its laws and economic management policies with OECD standards.

OECD members made what they called a “historic” decision on Feb 20 to start accession discussions with Indonesia. Its office is now preparing a draft accession road map for the technical review process for the consideration of the OECD Council at its next meeting.

“The decision to open accession discussions will benefit both Indonesia and the OECD,” OECD Secretary-General Mathias Cormann said.

Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto said that the country has completed almost all things related to international trade agreements.

He said Indonesia’s accession to OECD will support the government’s priority programs like the green economy, digitalization, human resources development, good governance, and push Indonesia to get out of the middle-income trap soon, according to a report by the Solopos website.

The OECD said reviews by the more than 20 technical committees will focus on priority issues, including open trade and investment, progress on public governance, integrity and anti-corruption efforts, as well as the effective protection of the environment and action to tackle climate change, to ensure Indonesia’s alignment with OECD standards.

There is no deadline for the completion of the accession process. The outcome and timeline will depend on the country’s capacity to adapt and adjust to align with the OECD’s standards.

Following its 2025-45 National Long-Term Development Plan, Jakarta sets a target for achieving “Golden Indonesia Vision 2045”, becoming a developed nation with per capita income equaling that of developed nations and its poverty rate reaching near-zero.

Last year, Indonesia’s GDP per capita income was 75 million rupiah ($4,790), according to the country’s Central Bureau of Statistics.

However, Josua Pardede, an economist at Bank Permata in Jakarta, warned about potential frictions in harmonizing the country’s laws and policies with OECD standards, especially the “free market principles” upheld by the organization.

Pardede said the government ending its long-held fuel subsidies could have serious economic impact as well as negative social and security implications.

Bhima Yudhistira, director of the Center of Economics and Law Studies in Jakarta, said joining the OECD could help Indonesia avoid a middle-income trap.

“But, Indonesia needs to prepare many things before officially proceeding to become a member,” he was quoted by the Kompas news site as saying.

Launched in December 1960, the OECD’s 38 members are mostly European and American countries.