Chalmers backs Indonesia’s OECD push
Australia has become the first country to officially endorse Indonesia joining the Organisation for Economic Co-operation and Development, with three cabinet ministers writing to their counterparts in Jakarta to confirm Canberra’s support.
Indonesia’s Finance Minister Sri Mulyani is in Paris this week to begin Indonesia’s formal application to join the club of largely wealthy nations.
Treasurer Jim Chalmers and Indonesian Finance Minister Sri Mulyani shake hands after signing a memorandum of understanding in Canberra in September 2022. AAP
The OECD is an intergovernmental organisation to stimulate economic progress and world trade. Its goal is to shape policies that foster prosperity, equality, opportunity and wellbeing for all.
If successful, Indonesia would be the first country from South-East Asia to gain membership.
Treasurer Jim Chalmers said: “Welcoming Indonesia to the OECD carries many benefits for all parties, including Australia – it’s a move we strongly support.
“Greater integration with the dynamic markets of South-East Asia, specifically Indonesia, will ultimately help deliver better jobs and opportunities here at home.
“Australians can be the beneficiaries of some of the big shifts that are under way in the region by deepening our engagement with Indonesia, and South-East Asia more broadly.”
“Australia and Indonesia are close friends and neighbours – I’m grateful to work closely with Sri Mulyani as we continue to tackle some of our shared economic challenges.”
South-East Asia strategy
Foreign Affairs Minister Penny Wong and Trade Minister Don Farrell have also written to their Indonesian counterparts.
The Albanese government’s South-East Asia economic strategy aims to deepen engagement with the region and increase trade and investment.
Former Macquarie Group chief executive Nicholas Moore has delivered the government 75 recommendations to develop a new economic strategy for the rapidly growing region.
The report, released in Jakarta in September by Prime Minister Anthony Albanese, found Australia’s trade and investment growth with the region have not kept pace with South-East Asia’s economic growth over the past 20 years.
The Australian Financial Review first revealed in August that Australia was backing Indonesia’s push to join the OECD, as part of a strategy to build closer economic and geopolitical ties between the neighbours.
The process to break into the European-dominated OECD is expected to take several years.
Joining the OECD would help build momentum for Indonesia, the world’s 16th-largest economy and forecast to become the fourth-biggest by 2045, to open up to more international trade and foreign investment.
Geopolitically, Indonesia has hedged itself between China and Western countries.
Hence, Australia also has a geopolitical interest in strengthening relations with Indonesia and encouraging it further towards the rules-based international order promoted by the OECD.
Former Australian finance minister Mathias Cormann was elected OECD secretary-general in 2021 after campaigning for more Indo-Pacific influence at the organisation.
Template for Singapore and Thailand
Indonesia has reached so-called “upper-middle-income country status” with GDP per capita of about $US4800 in 2022, according to the World Bank.
President Joko “Jokowi” Widodo hosted an OECD delegation at the presidential palace in August and Mr Cormann visited the country.
Mr Widodo visited Australia in July.
Indonesia’s potential accession to the OECD could become a template for other South-East Asian nations to join in the future, such as Singapore and Thailand.
Dr Chalmers has met Indonesia’s finance minister at least six times since July 2022.
They signed a memorandum of understanding in September last year to strengthen economic co-operation between the two countries, including the exchange of economic officials and ideas.
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