Why is the OECD Relevant for the Prosperity of Indonesia and Southeast Asia?
Now is the time for OECD to strengthen its engagement with Southeast Asia to enhance its relevance and global impact.
The Indonesian version of this article has been published by Kompas on May 2nd, 2024. Here is the official translation provided by The Embassy of Japan in Indonesia.
On the 60th anniversary of Japan’s accession to the OECD, it is a great honor for Japan to chair this year’s OECD Ministerial Council Meeting (MCM) with the participation of Indonesia, Thailand, Viet Nam, Singapore, Laos (the ASEAN Chair) and the ASEAN Secretariat.
As one of the few OECD member countries from Asia, Japan will focus at the MCM on stressing the importance for the OECD to reach out to the Indo-Pacific region in order to work together with the countries of this important region to share good policy practices and seek better common rules for realizing inclusive and sustainable growth.
Following the 50th year of ASEAN-Japan relations last year, we have witnessed significant developments in the relationship between the OECD and Southeast Asia from the beginning of 2024. In February, the OECD made a historic decision to initiate the accession review for Indonesia, one of the world's most dynamic growth centers and third largest democracy.
This was a major outcome of Indonesia’s continuous engagement with the OECD ever since the designation of the country as an OECD key partner in 2007. Thailand has also expressed its intention to join the OECD. It is also encouraging that Singapore and the ASEAN Secretariat respectively signed MOUs with the OECD in 2022. On this monumental occasion, let me once again reflect on the significance of the OECD’s outreach to Southeast Asia, in particular the process of Indonesia’s accession to the OECD.
As an international organization dedicated to promoting economic growth, the OECD has long played a leading role in rule-making and producing a wide range of tailored policy proposals and guidelines through collecting data on best practices and conducting peer reviews among member states. The rules and standards set by the OECD have become a bedrock for stable economic growth throughout the world.
Through strengthening its engagement with the OECD, Indonesia will benefit from the organization’s dataset and analysis that provide a wide variety of pointers for making necessary domestic reforms and overcoming the middle-income trap.
Even more importantly, Indonesia will be able to attract private investment by adopting the OECD’s rules and standards. It is good news for Indonesia that private investment would come on top of government funding to fill the financing gap to continue its remarkable economic growth at the same time as realizing sustainable development.
The OECD should also try to reflect the reality of global economic significance of the Southeast Asian countries and listen to their voices in rule-making in this new era.
The OECD should also try to reflect the reality of global economic significance of the Southeast Asian countries and listen to their voices in rule-making in this new era. The combined GDP of the OECD member countries dropped from approximately 80 percent of global GDP in 2000 to 60 percent in 2020.
From left, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus, European Commission President Ursula von der Leyen, U.S. President Joe Biden, Indonesian President Joko Widodo, Australian Prime Minister Anthony Albanese, Organisation for Economic Co-operation and Development (OECD) Secretary-General Mathias Cormann and Italian Prime Minister Giorgia Meloni attend a mangrove planting event at the Tahura Ngurah Rai Mangrove Forest Park as part of the G20 Leaders' Summit in Bali, Indonesia, 16 November 2022. (Mast Irham/Pool Photo via AP)
Despite the shift of growth in global economies, 26 out of 38 OECD member states are from Europe, whereas only four are from the Asia-Pacific, namely Japan, South Korea, Australia, and New Zealand. Although the OECD has played a significant role in promoting free trade and achieving sustainable economic growth of the world, now is the time for the organization to strengthen its engagement with Southeast Asia to enhance its relevance and impact on the global arena.
It needs to expand its diversity along with the change of the economic dynamism. The rules only serve their purposes when major stakeholders are involved in their formulation and implementation. Japan sees that the key to this challenge is the OECD’s greater engagement with Southeast Asia, the world’s most dynamic growth region.
The rules only serve their purposes when major stakeholders are involved in their formulation and implementation.
To further press forward the OECD’s outreach to the Indo-Pacific region, this year’s MCM will commemorate the 10th anniversary of the OECD Southeast Asia Regional Programme (SEARP), established by Japan’s 2014 MCM initiative, thereby encouraging greater engagement with Southeast Asia by the OECD.
Read also: "One Heart" in 65 Years of Diplomatic Relations between Indonesia and Japan
On this momentous occasion, Japan is absolutely determined to serve as a bridge between the OECD and Southeast Asia, thereby creating conducive conditions for sustainable growth for both Southeast Asia and the global economy as a whole.
As the Chair, Japan will also incorporate cross-cutting topics such as gender and climate change in the MCM agenda to contribute to achieving the SDGs in Southeast Asia. Most importantly, Japan will make this year's MCM an opportunity to further strengthen the rules-based free and fair economic order through greater engagement with the Indo-Pacific region.
*Yoko Kamikawa, Minister of Foreign Affairs of Japan
