The preamble of the 1945 Constitution mandates that the Unitary State of the Republic of Indonesia has objectives to promote public welfare, to enrich the nation's life, and to participate in carrying out world order. The mandate to carry out world order is implemented through Indonesia's active involvement in supporting world development, especially in addressing social inequalities and reducing poverty.
The Indonesian government has been actively cooperating with other developing countries in terms of global development since the Asian-African Conference in 1955. At that time, Indonesia hosted the event and was one of the initiators of cooperation initiatives among developing countries. The conference results were contained in the Bandung Principles (Dasasila Bandung). They became a guide for nations experiencing colonialism to fight for independence and as a basis to promote world peace and cooperation.
The Asian-African Conference is the starting point for cooperation between developing countries known as the South-South Cooperation (SSC). Since then, several international forums have been held among developing countries. One of them is the United Nations Conference on Technical Cooperation Among Developing Countries in 1978, attended by 138 countries, which produced the Buenos Aires Plan of Action (BAPA). BAPA became historically crucial for implementing technical cooperation among developing countries and creating a new international economic order to enhance economic development in developing countries.
In reality, the Government of Indonesia has extended grants in international cooperation for a long time through ministries/agencies. However, the provision of assistances tended to be ad hoc and spontaneous, not yet based on a specific policy or criteria as guidelines, and not yet integrated.
To improve the governance of grant provision in international development cooperation, the Government of Indonesia takes a strategic step by enacting Government Regulation Number 48 of 2018 regarding Procedures for Providing Grants to Foreign Governments / Foreign Institutions. Government Regulation Number 48/2018 has accommodated the provisions related to grants in the form of the authority and responsibility of each institution in administering grants, the need for a grant-distribution policy, and the process of proposing, approving, budgeting, and accountability for delivering grants. In Government Regulation Number 48/2018, budget for extending grant is still managed by regular working units.
In its development, as a respond to the demands for the acceleration of grant delivery and an innovation in financing the grant that does not burden the State Budget in the future, it is considered necessary to improve the grant provision arrangement stipulated in the Government Regulation Number 48 of 2018.
With Government Regulation Number 57 of 2019 concerning Amendments to Government Regulation Number 48 of 2018 regarding Procedures for Providing Grants to Foreign Governments/Foreign Institutions, several arrangements for grants provision have been improved, including (i) establishment of a fund management unit with a financial management as a public service agency; and (ii) the existence of a cross-ministerial/institutional Steering Committee that provides strategic policy directions to guide the fund management unit in providing grants.
The fund management unit with the financial management as a public service agency is responsible for managing funds and channeling funds for the grants-provision. With this mechanism, the grant-distribution process is expected to be implemented quickly, and the self-financing for grant provision also can be materialized in the near future.
Following the mandate of Government Regulation Number 57 of 2019, the Minister of Finance, with Regulation of Minister of Finance Number143 of 2019 dated 15 October 2019, specified the establishment of the International Development Cooperation Fund (LDKPI). To conduct cooperation with international partners and institutions, LDKPI uses the nomenclature of the Indonesian Agency for International Development (Indonesian AID).
On 18 October 2019, the Indonesian Aid was inaugurated by H.E Vice President Jusuf Kalla at the Pancasila Building, Ministry of Foreign Affairs, attended by Officials from Ministries / Institutions, Representatives from Friendly Countries, and Foreign Development Partners. On that occasion, the Vice President said that the formation of Indonesian Aid has long been required as a form of “hands on diplomacy". In her remarks, Minister of Finance, Sri Mulyani Indrawati told that the formation of LDKPI was a form of the Ministry of Finance's commitment to work closely with the Ministry of Foreign Affairs in encouraging Indonesian diplomacy. In her statements, Minister of Foreign Affairs Retno Marsudi also stated that LDKPI would strengthen Indonesia's role in carrying out world order.
