Indonesia's Long Road to OECD Membership
Indonesia’s desire to join the Organisation for Economic Co-operation and Development (OECD) is one of the current administration’s strategic agendas. If successful, Indonesia will become the first Southeast Asian country to enter the group of nations long known as a club of developed countries with high standards of economic and governmental governance.
Diplomatically, this step deserves appreciation. OECD membership is not merely a symbol of international recognition. It presents opportunities to strengthen Indonesia’s credibility in the eyes of global investors, improve the quality of public policy, and accelerate various institutional reform agendas that have not always run smoothly.
However, behind this ambition lies significant homework. The OECD has stressed the importance of maintaining fiscal discipline, improving the effectiveness of subsidies, and ensuring various government priority programmes are implemented accountably so that the budget deficit remains below three per cent of Gross Domestic Product (GDP).
This warning deserves serious attention. The OECD accession process is not simply a race to pursue international status. What is truly at stake is Indonesia’s ability to carry out governance reforms consistently and sustainably. OECD membership is not obtained through political support or diplomacy alone, but through meeting strict standards across various fields, from government governance, fiscal policy, investment, and trade to environmental protection and public sector integrity.
Indonesia has now entered the second year of the OECD accession process since the accession roadmap was accepted in 2024. In this phase, various ministries and agencies are beginning to face more in-depth assessments from OECD committees. Hundreds of legal instruments, regulations, and national policy practices will be scrutinised to measure their conformity with the organisation’s standards.
The experience of several countries shows that this process is not a short-term task. The reforms requested often touch the foundations of economic management, bureaucracy, and governance. Therefore, Indonesia’s biggest challenge is not merely fulfilling a checklist of requirements, but ensuring that reforms genuinely operate in practice, not just on paper.
This is where the real test begins.
One major concern is fiscal sustainability amid growing state spending needs. The government is currently running several priority programmes that require substantial budgets, including the Free Nutritious Meal programme (MBG). In terms of objectives, this programme holds strategic value as it aims to improve human resource quality while addressing nutritional issues Indonesia still faces.
Yet experience shows that large-scale programmes always carry complex governance consequences. Procurement of goods and services, distribution, supervision, and financial reporting become vulnerable points requiring extra attention.
Various reports regarding alleged irregularities, procurement issues, and potential budget leakages in public programme implementation consistently draw public attention. Indonesia has a track record showing that programmes with large budget allocations often face corruption risks when oversight systems do not function optimally.
Such risks not only harm state finances. More dangerously, public trust in programmes actually designed to help the community can also be eroded.
For the OECD, governance quality is a crucial indicator in assessing a country’s readiness. Systemic corruption, weak transparency, and low fiscal accountability can become serious obstacles in the accession process. Therefore, Indonesia’s success cannot be measured solely by its ability to provide budgets or launch large programmes, but by its ability to ensure every rupiah of the budget genuinely reaches the intended beneficiaries.
Beyond MBG, the issue of subsidies is also a focus for the OECD. Energy subsidies and various forms of government assistance have historically served an important social function, particularly in maintaining public purchasing power. However, the OECD consistently encourages subsidies to be more targeted and not become a long-term fiscal burden.
The challenge lies in how the government maintains a balance between social protection and fiscal health. Reducing subsidies too quickly could trigger social unrest and depress purchasing power. Conversely, maintaining broad subsidies without improving distribution mechanisms can erode fiscal space that should be used for more productive investments, such as education, health, and infrastructure.
In this context, OECD accession should be viewed as momentum to improve the quality of public policy, not merely to chase membership status.
The government must ensure that the reforms undertaken genuinely deliver tangible benefits to the wider public. Transparency and digitalisation of strategic programmes need to be strengthened so that budget management becomes more open and easily monitored by the public. The more transparent a programme, the smaller the room for irregularities.
At the same time, the capacity of internal and external oversight institutions must also be reinforced. The roles of the Audit Board of Indonesia (BPK), the Government Internal Supervisory Apparatus, the Corruption Eradication Commission (KPK), and civil society participation are important factors in maintaining the accountability of programmes with large budget values.
Fiscal discipline must also remain the primary anchor. Every new spending policy needs to be supported by clear funding sources.