Australia–Indonesia relations refers to the foreign relations between Australia and one of its few neighboring countries, Indonesia. It began as early as 1640 with contact between Indigenous Australians and Makassan trepangers from southwest Sulawesi and formalised with Australia's full recognition of Indonesia in 1949. The relationship has been characterised by growing mutual trade of $14.9 billion in 2011–2012, an increase of 8.3% on the previous year, in addition to close links in government, education, and defence under the Lombok Treaty. Both nations are members of the G20, ASEAN Regional Forum, and the Australia-New Zealand-ASEAN Free Trade Agreement. Indonesia received $541.6 million in Australian development aid in 2012–2013.
Overview of Australia’s aid program in Indonesia
How they are helping
- 2018-19 Total Australian ODA 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
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. We 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 our work in Indonesia all the more important, because sustainable and inclusive economic growth in Indonesia benefits Australia and contributes to regional growth and stability.
Policy framework
Australia's Aid Investment Plan 2015/16-2018/19 aligns with the priorities of Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN). This plan sits under the country's National Long-Term Plan 2005-2025 (RPJPN) and sets out the Indonesian Government's vision and priorities for the country. The nine priority areas include good governance, improved productivity and competitiveness, human resource quality and self-sufficiency. The 2015-19 plan has a focus on eastern Indonesia to help address regional disparities in development, while maintaining growth momentum in other parts of the country.
Their development partnership with Indonesia is structured around the three objectives of their Aid Investment Plan.
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. We 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.
