As a member of the G-20 and the 7th largest economic growth globally, Indonesia made its achievements since 1999, which was able to cut the poverty rate by more than half to 9.4 percent in 2019. However, around 25 million Indonesians still live in poverty, and another 50 million remain at risk of falling back into poverty due to COVID-19. 

 

 

 

 

 

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According to Oxfam, the gap between the richest and the rest in Indonesia has grown faster than in any other country in South-East Asia in the past two decades. It is now the sixth country with the greatest wealth inequality in the world. Today, the four richest men in Indonesia have more wealth than the combined total of the poorest 100 million people.

Being one of the world’s largest greenhouse gas emitters, Indonesia plays an important role in addressing climate change. The country is also at high risk for climate change impacts that threaten sustained growth. Rapid urbanization further increases environmental pressures and stresses public services and infrastructure in cities.

With those complexities, Indonesia is committed to achieving Sustainable Development Goals. Still, it faces a complex set of environmental, economic, and social challenges, ranging from the depletion of natural resources and pollution to growing income inequality.

The Swiss State Secretariat for Economic Affairs (SECO) provided CHF 65 million in grant funding for high-quality technical assistance to support Indonesia in overcoming remaining development challenges and becoming more competitive, resilient, equitable, as well as resource-efficient.

What are SECO’s objectives?

SECO aims to assist Indonesia in overcoming remaining development challenges and becoming a more competitive, resilient, equitable, and resource-efficient economy. The Cooperation Program will focus on:

Effective public institutions, particularly in urban areas

SECO will assist the Indonesian government in strengthening institutional capacities at the national, and the subnational levels to increase domestic revenue collection, manage public funds more efficiently, and implement effective economic and financial policies. With regard to infrastructure, SECO will support the capacities of secondary cities to prioritize infrastructure investments in the water, energy, and transportation sectors, based on data-driven analytics. SECO will support urban connectivity by promoting public transportation systems, which corresponds to the Indonesian Government’s commitment to reducing greenhouse gas emissions.

Strengthening private sector competitiveness, in particular, SMEs

 

 

 

 

 

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Recognizing the importance of SMEs, SECO will continue to reduce financing obstacles for SMEs and facilitate access to finance. The Program will promote women entrepreneurship, leverage fintech, and digital platforms to boost SME productivity and growth. The Program will help SMEs obtain improved market access for goods and services. It will also support sustainable value-chain integration, in particular of export commodities, including palm oil.

Another key factor in boosting competitiveness is improving the skills of the workforce. Given Switzerland’s successful dual education system, SECO’s Program focuses on improving the quality of the vocational education system to develop a more skilled workforce that can meet market demands across different sectors. This will also enhance employability for graduates, including women.

Mainstreaming Gender and Climate Considerations

Gender equality and climate change are transversal themes, which will guide Swiss engagement. SECO fosters gender equality by building on existing engagements in gender-responsive budgeting and exploring new avenues to reduce the gender gap through digital services and new technologies. SECO also applies a climate lens when developing projects and utilizes adaptive strategies for implementation.

Addressing economic challenges related to COVID-19

 

 

 

 

 

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Through its Cooperation Program, Switzerland is committed to assist Indonesia in addressing pandemic-related economic challenges. SECO’s technical assistance in public financial management will support Indonesia in mobilizing more resources and using public funds more efficiently, as well as help develop reforms that support a sustainable and inclusive economic recovery.

Moreover, mobilizing private financing to close the infrastructure gap is more urgent than ever as fewer public resources are available. To this end, the program will continue to support Indonesia in preparing solid infrastructure projects that will leverage much needed private investment.

SECO will also assist Indonesia in upgrading policy frameworks to spur investments and develop sustainable value chains, particularly in the tourism sector, which was hit hardest by the pandemic.