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DOMESTIC REFORMS BIGGEST CHALLENGE FOR INDONESIA'S OECD MEMBERSHIP: EXPERT

Jayanty Nada Shofa
February 26, 2024 | 5:11 pm
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OECD Secretary-General Mathias Cormann and President Joko "Jokowi" Widodo meet
at the Merdeka Palace in Jakarta on August 10, 2023. (Photo Courtesy of
Presidential Press Bureau)

Jakarta. Domestic reforms are expected to be Indonesia’s greatest challenge in
its accession process to the Organization for Economic Cooperation and
Development (OECD), according to an analyst.

The OECD recently decided to begin membership talks with Indonesia. Jakarta had
long been seeking a seat at the OECD to supercharge its economic growth. The
OECD will draft a roadmap for Indonesia to become part of the rich country club.
Indonesia will undergo reviews --involving over 20 technical committees-- on
areas such as open trade, investment, public governance, and climate, to name a
few. 

Muhammad Habib, an international relations researcher at think-tank CSIS
Indonesia, recently said that Jakarta had to pay attention to both “domestic and
international elements” as the membership talks commenced. This means that
Indonesia has to make changes to the policies at home to meet the OECD standards
based on the reviews, while also maintaining good ties with the group’s members
at the same time.

“Indonesia’s biggest challenge for OECD membership is the domestic reforms, and
to what extent is the government politically committed to meet OECD’s technical
standards. Although I’m quite skeptical, considering the entrenched interests
among our politicians,” Habib recently told the Jakarta Globe.

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Reforms related to legal certainty, transparency, and anti-graft are expected to
be the most challenging for Indonesia, according to Habib.

“At the same time, there are challenges related to the international system. For
instance, the potential rise of populist or hyper-nationalist leaders in OECD
countries. And then there is China which can be an alternative partner that does
not set any particular requirements,” Habib said.

When asked if he had a specific leader in mind, Habib mentioned Donald Trump who
would potentially return to the White House in the upcoming election. He added:
“Trump does not really trust international institutions.”

The US is a member of the OECD. Last year, the incumbent US President Joe Biden
said that Washington would back Indonesia’s OECD membership. The Trump
administration saw the US withdrawing from international agreements, including
the Paris climate accord. Trump was also critical of international institutions,
including the World Trade Organization (WTO), arguing that they had been
treating the US very badly. Despite its substantial economic size, China is not
a member of the OECD but has been a key partner in the group

The OECD membership talks announcement came not long after Indonesia held its
2024 election. The latest count of the ballots shows Prabowo Subianto and Gibran
Rakabuming are in the lead, claiming over 58 percent of the total votes.
However, Habib said it was still too early to comment on how Prabowo's likely
victory would impact Indonesia’s OECD candidacy.

Bhima Yudhistira, the executive director of the economic think-tank Celios,
recently said that the OECD membership could get Indonesia out of the
middle-income trap. However, Bhima admitted that Indonesia had a long to-do list
to align with the OECD standards.

“There are many sub-national government regulations, coupled with the laws, that
we might need to liberalize, particularly those related to licenses, business
competition, and trade,” Bhima said.

“Even Brazil has to harmonize over 200 of its regulations [with OECD standards]
when they want to join the group,” he told the Globe.

Brazil is in the process of getting into the OECD with its accession talks
commencing in 2022.

It is still too early to tell when Indonesia will complete the accession
process. The OECD said that the group had not set a fixed deadline, meaning how
long it takes will depend on whether Indonesia can meet its standards. However,
it typically takes between 5-8 years before a country can become a full-fledged
member of the OECD.



Tags:
#International
Keywords:
OECD Organization for Economic Co-Operation and Development Muhammad Habib CSIS
Donald Trump Prabowo Subianto Indonesia in OECD OECD Membership OECD Accession
Talks
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