Indonesia is an upper-middle income economy according to the World Bank, having graduated from lower-middle income status in July 2023. Its 2023 GDP of $1.4 trillion accounts for 36% of the regional GDP of Southeast Asia. With a population of 281 million, Indonesia’s GDP per capita is $4,876, the fifth-highest in the region.
From 2015 to 2023, 20,456 aid and development projects were implemented in Indonesia by 85 development partners, totalling $100 billion in official development finance (ODF).
Key trends
ODF disbursements including grants, loans, and other forms of assistance to Indonesia have decreased over time, although Indonesia receives the largest volume of ODF in the region. A 2015 peak in spending of more than $15 billion has dropped to a post-Covid (2021–23) average of $9.2 billion annually.
ODF has fluctuated relative to Indonesia’s economy, down from a high of 1.8% in 2015 to 0.7% in 2023. As the region’s largest economy, Indonesia’s 2023 ODF to GDP ratio is the sixth-highest. Of Indonesia’s total ODF, 72% is delivered through non-concessional loans.
Looking ahead, new commitments to Indonesia grew by 76% in 2023 from 2022, rebounding above the pre-Covid (2015–19) average.
- Spent
- Committed
Development partners
China, the World Bank, and the Asian Development Bank (ADB) have been Indonesia’s primary development partners, together accounting for almost 60% of Indonesia’s ODF since 2015.
Lower levels of Chinese spending in Indonesia in 2021 and 2022 have been partially corrected with a slight uptick in 2023, driven almost entirely by the completion of the Jakarta–Bandung High-Speed Rail project. Despite that major disbursement, 2023 volumes were still only half of China’s average yearly spend from 2015–22. While in the past China has been responsible for up to a third of Indonesia’s ODF, since 2021 that proportion has stabilised at around 10%. Due to the scale of two infrastructure megaprojects, more than two-thirds of China’s spending in Indonesia has been concentrated in the transport and storage and energy sectors. China’s ODF to Indonesia is exclusively offered through non-concessional loans.
Since 2021, the World Bank has pulled ahead as Indonesia’s largest development partner, accounting for an average of 27% of Indonesia’s total ODF for the last three years. Major pandemic recovery programs in the health sector have contributed to much of this growth, though the bulk of the World Bank’s ODF to Indonesia since 2015 has been spent in the government and civil society sector.
The ADB has also been a key provider of ODF to Indonesia, with its contribution up 48% in 2023 from 2022. The ADB has contributed markedly steady volumes, averaging $2 billion annually, mostly through non-concessional loans.
Once Indonesia’s second-largest development partner, South Korea’s ODF dropped dramatically to just 2% in 2023, down from 24% in 2015. This is primarily due to a scaling back of non-concessional loans and rising levels of official development assistance, a curious reversal of the trend of most partners.
The rising role of the multilateral development banks in Indonesia has been supplemented by secondary donors such as Japan, Germany, and Australia.
Sectors
The energy and government and civil society sectors receive the most ODF in Indonesia, each accounting for 21% of the total. That proportion does not reflect a static distribution over time, as energy spending has fallen and support for government and civil society has grown, driven by large programs from the multilateral development banks.
As a proportion of total ODF, spending in the transport and storage sector is around half the regional average.
Consistent with the region’s other upper-middle income economies, Indonesia’s ODF spending on health, education, agriculture, forestry and fishing is much lower than the regional average.
- Indonesia
- Regional average
Policy goals
The Southeast Asia Aid Map tracks ODF with integrated policy goals across three policy domains or cross-cutting themes (as distinct from sectors): climate action, gender equality, and disability inclusion.
Indonesia has received rising levels of policy-integrated ODF. Over 2015–23, Indonesia received more than the regional average for ODF integrating disability inclusion (12%). However, it received slightly less than the regional average for ODF targeting gender equality (22%) and climate action (26%).
Provision of intra-regional ODF
Indonesia is the sixth-largest provider of intra-regional ODF, providing an annual average of $235,000 over 2015–23. Indonesia’s intra-regional assistance is typically in the humanitarian aid sector, with occasional contributions in government and civil society, education, and health. Jakarta has extended around half of its ODF to Myanmar as humanitarian aid, and has also provided small amounts to Timor-Leste, Laos, and Vietnam.