Country focus |

Overview of Australian Aid Program in Indonesia

Country Focus | 17 January 2020
Australia has long been one of the biggest contributors to assisting Indonesia’s development by direct and indirect aid and grants to specific areas of need. Photo Courtesy of Australian Aid/NOWJAKARTA

Australia has long been one of the biggest contributors to assisting Indonesia’s development by direct and indirect aid and grants to specific areas of need. Here is a quick overview of the current focus for the aid programs.

How they are helping

2018-19 Total Australian Overseas 

Development Aid Estimated Outcome

$331.3 million

2019-20 Bilateral Budget Estimate

$255.7 million

2019-20 Total Australian ODA Estimate 

$298.5 million

The Australian Government will provide an estimated $298.5 million in total ODA to Indonesia in 2019-20, including an estimated $255.7 million in bilateral funding managed by DFAT.

How they work together with Indonesia

They work in an economic partnership, supporting Indonesia’s efforts to tackle inequality and maintain social stability, promote tolerance and pluralism, and counter violent extremism. They provide policy and technical advice that will improve the quality of Indonesia’s investments in infrastructure, economic governance, human development and social policy, including in the area of law and justice.

Why their work is important

While Indonesia has experienced steady economic growth in recent years and achieved substantial development progress, development across the country is uneven — poverty rates are seven times higher in Papua than in Java — and inequality remains a pressing challenge for the government. More than 72 million people in Indonesia continue to live under the World Bank’s $3.20 per day poverty line. This context makes their work in Indonesia all the more important, because sustainable and inclusive economic growth in Indonesia benefits Australia and contributes to regional growth and stability.

Objective 1: Effective economic institutions and infrastructure

Improving economic institutions and infrastructure is essential to Indonesia’s ongoing development.

Australia supports Indonesia’s efforts to boost inclusive growth and productive jobs through refining its public policy and regulatory settings. They contribute to improved economic productivity by supporting financial sector stability, revenue mobilisation, and improved government spending and tax collection.

They work to increase access to agricultural markets for poor farmers in Eastern Indonesia, supporting economic growth and improving food security in the region.

They are helping drive infrastructure investment and growth through technical assistance and policy advice on regulations, planning and evaluation. A multifaceted approach, including more efficient use of government resources, careful project selection and preparation, and productive partnerships between the public and private sectors, will result in better infrastructure development.

Objective 2: Human development for a productive society

Indonesia needs to strengthen the development of human capital to create the conditions for higher growth. Their innovative education program works with schools to identify local challenges and opportunities to develop new approaches to tackle problems.

Their Australia Awards Scholarships deliver educational dividends for Indonesia’s future leaders as well as valuable people-to-people links. Areas of study focus on a broad range of fields relevant to economic and development outcomes.

They are also working with Indonesia to prevent, detect and control emerging infectious diseases, a threat to Indonesian and Australian security, and they continue to prepare for and provide support to Indonesia during times of humanitarian need.

Objective 3: An inclusive society through effective governance.

They work with Indonesia to ensure that the poor and marginalised in society benefit from economic growth, helping to meet Indonesia’s poverty reduction targets by improving basic services and employment opportunities. They are helping develop better quality economic and social protection policies based on research and analysis. They are pursuing programs for women’s economic and political empowerment, which help women gain jobs and other sources of financial security. Marginalised groups benefit from improved disability access and support as well as better local service provision. Having helped improve citizens’ access to legal services, their law and justice work will shift to support for counter-terrorism, and prison and court reforms.

Their results

In 2018-19, Australian support contributed to:

  • Indonesia reducing its administrative costs by over AUD 1.7 billion, as part of the 2020 Budget process;
  • Indonesia leveraging over AUD 2 billion from multilateral banks and other sources to finance priority infrastructure;
  • the maintenance and rehabilitation of more than 1,479 km of road in West Nusa Tenggara province;
  • increasing incomes of 345,001 smallholder farming households by 252 per cent, including 225,000 women;
  • a regulation to allow 16,921 small and medium size businesses to use home addresses for business registration—53 per cent of which are women-owned;
  • the expansion of social protection to more than 9 million poor and vulnerable Indonesians; 
  • 1 million teachers accessing quality professional development programs to improve student learning outcomes in madrasahs;
  • enhancing higher education outcomes through the provision of 250 Australia Awards Scholarships and over 300 short-term awards; 
  • improved water access for 5.7 million people and improved sanitation for 4.7 million people, including 12,567 people with disabilities;
  • supporting partners on the ground providing critical health and gender-based violence services to 13,717 crisis affected persons.