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Overview

  • The largest economy in Southeast Asia, Indonesia – a diverse archipelago nation of more than 300 ethnic groups – has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s.

    Today, Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20. Furthermore, Indonesia has made enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to 9.78% in 2020. Prior to the COVID-19 crisis, Indonesia was able to maintain consistent economic growth, recently qualifying the country to reach upper middle income status

    Indonesia’s economic planning follows a 20-year development plan, spanning from 2005 to 2025. It is segmented into 5-year medium-term plans, called the RPJMN (Rencana Pembangunan Jangka Menengah Nasional) each with different development priorities. The current medium-term development plan – the last phase of the long-term plan – runs from 2020 to 2024. It aims to further strengthen Indonesia’s economy by improving the country’s human capital and competitiveness in the global market. 

    Considerable development challenges remain in Indonesia.  In addition,  the global crisis caused by the COVID-19 pandemic brings unprecedented complications for Indonesia to achieve its development goals.   

    Between March and September 2020, official statistics reported an increase in the national poverty rate from 9.78% to 10.19%, translating into an increase in the number of poor from 26.42 million to 27.55 million, out of a population of 270.2 million – turning back three years of progress in poverty reduction.

    Furthermore, although Indonesia was able to reduce the stunting rate to 27.7% in 2019, more remains to be done. Such efforts are critical to ensure Indonesia’s strong and productive human capital. At the moment, according to the World Bank's Human Capital Index, Indonesia's next generation will only be 54% as productive as it could have been with full health and complete education. 

    To respond to the shock of the COVID -19 pandemic, the government implemented emergency fiscal packages equivalent to 3.8% of GDP (actual spending) in 2020 and to 4.2% of GDP (tentative; data as of March 18, 2021) in 2021, to deal with the health impact, provide relief to households and firms, and support the vaccine roll-out, and the recovery. T. The World Bank is supporting the Indonesia’s COVID-19 emergency response, including enhancing  social assistance and health care systems, while also strengthening the resilience of the financial sector.

    Last Updated: Apr 06, 2021

  • The partnership between Indonesia and the World Bank has evolved over six decades to become one of the Bank’s most significant in terms of lending, knowledge services and implementation support. Since 2004, World Bank support for Indonesia has moved towards supporting a country-led and country-owned policy agenda, consistent with Indonesia’s status as a middle-income country.

    In December 2015, after broad consultations with government, civil society, and the private sector, the Board approved the 2016-2020 Country Partnership Framework (CPF) for Indonesia, aligned with the priorities of Indonesia’s medium-term development plan, the RPJMN.

    The CPF strategy’s main objective was supporting the government of Indonesia to: eliminate extreme poverty, generate prosperity, and reduce inequality. The strategy was organized around six engagement areas which were supported by two pillars.

    Engagement areas: 

    1.   Infrastructure

    2.   Sustainable and universal energy access

    3.   Maritime economy and connectivity

    4.   Delivery of local services 

    5.   Sustainable landscape

    6.   Collecting more and spending better

    Supporting pillar:

    1.   Leveraging the private sector 

    2.   Shared prosperity, equality, and inclusion

    Relatedly, as part of the country’s engagement approach, the Systematic Country Diagnostics (SCD) for Indonesia has recently been updated. This document provides the analytical foundation for the upcoming Country Partnership Framework for the 2021 – 2025 period, which is currently being prepared.

    Last Updated: Apr 06, 2021

  • Promoting human capital is an important priority for Indonesia. The National Strategy to Accelerate Stunting Prevention – prepared based on advice from the World Bank and supported by the Investing in Nutrition and Early Years (INEY) Program – has reduced the national stunting rate by a record-breaking 3.1 percentage points in its first year by incentivizing a “whole-of-government” approach to bringing nutrition services to millions of pregnant women and children under two across the country. 

    The World Bank supports the government’s Family Hope Program or Program Keluarga Harapan (PKH), which strives to end the cycle of poverty among the poorest. In addition to cash benefits to incentivize beneficiary families in utilizing maternal and children related health and nutrition services and sending their children to schools, the program also provides family development sessions and learning materials to beneficiary mothers so that they can gain a better understanding of health and nutrition, good parenting practices, child protection, and financial management. The program has assisted families to improve their children’s education and health as shown by several impact evaluations. A recent study shows that the cumulative impact of PKH can reduce stunting by around 9 percentage points, which means that the probability of children aged 0 to 60 months being stunted declines by 23%. On the education outcomes, PKH is able to solve the last-mile enrollment problem for children aged 7-15, by eliminating more than half of nonenrolment. Since 2017, the government has expanded the program significantly in both coverage and benefit levels; and in 2020, the program reached 10 million poor and vulnerable families. Most recently, the Bank supported the government’s COVID-19 response to poor households through US$98 million under Additional Financing for Indonesia's Social Assistance Reform Program for top-up of cash transfers to existing PKH beneficiaries under a new temporary emergency scheme. 

    Promoting human capital is an important priority for Indonesia, and the Bank is helping improve education quality in remote areas. The KIAT Guru pilot empowered communities and ties allowance payment to teachers’ performance. The program was implemented in over 400 schools. The pilot’s impact evaluation and qualitative study found the pilot significantly improved learning outcomes and parental engagements compared to non-pilot schools. The Bank is supporting the Ministry of Education and Culture to sustain the pilot independently. In 2020, the Ministry issued a regulation for affirmative school operational funds for 55,115 remote schools serving remote and disadvantaged communities. The Ministry also adapted the pilot’s digital diagnostic learning assessment for nation-wide utilization.  

    The World Bank is also supporting the government’s PAMSIMAS program to provide clean water and sanitation services. Active across 33 provinces and almost 23,000 villages, PAMSIMAS is a collaboration between local governments and communities, and widely considered to be the most cost-effective option for scaling up water and sanitation services. Between 2006 and the end of 2018, 17.2 million have benefited from access to improved water facilities, and 15.4 million people with access to basic and improved sanitation. 

    Transparency plays a crucial role in the administration of good governance. To improve transparency and public participation on state budget spending, with a support from Public Financial Management – Multi Donor Trust Fund, the World Bank has assisted the Ministry of Finance to develop a mobile application that can be accessed by millions of citizens from their smartphones at anytime and anywhere. This mobile application is designed to inform citizens about the central government’s budget and public money being spent for delivering services, including the budget to combat COVID-19 pandemic.  

    Last Updated: Apr 06, 2021



LENDING

Indonesia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


In Depth

Indonesia Human Capital Knowledge Series

Explore this page to learn more about why human capital is important for Indonesia and what the country needs to do.

Indonesia Economic Prospects (IEP)

Indonesia’s economy remains positive and future potential is even greater, but ongoing challenges and risks remain.

Indonesia Sustainable Oceans Program

Sustainably managing the oceans and its ecosystem to improve coastal communities' livelihood, protect ocean health and ensure sustainable economic growth.

Indonesia Sustainable Landscapes Management Program

Promoting an integrated landscape management approach with the ultimate goal of reducing deforestation and forest degradation and supporting equitable growth through sustainable use of forest resources.

Project Map

Browse the World Bank project locations and datasets to gain insights across areas of interest including regions, countries, custom areas and more.

Partners Through Time

Explore the Indonesia-World Bank partnership in this interactive timeline.

Results Profiles

Take a look at what results the World Bank projects have achieved in Indonesia.

Open Data

The World Bank provides free and open access to a comprehensive set of data about development in countries around the globe, including Indonesia.

INDO-DAPOER

The Indonesia Database for Policy and Economic Research has sub-national data for almost 200 development indicators.

Additional Resources

Country Office Contacts

Jakarta, (+62-21) 5299-3000
Indonesia Stock Exchange Building, Tower 2, 12th Floor. Jl. Jenderal Sudirman Kav 52-53, Jakarta 12190
wbindonesia@worldbank.org
Washington, +1-202-473-4709
1818 H Street, N.W, Washington, DC 20433
eapnews@worldbank.org