and inclusive growth
A partnership for prosperity
Prospera builds on two decades of Australian support for strong, sustainable and inclusive economic growth in Indonesia. It implements important elements of the comprehensive strategic partnership between the two countries.
Prospera works with around 30 Indonesian government agencies, providing them with evidence on which to base policy. Prospera advice helps to improve government spending and revenue, markets, the financial sector, transport, and public-sector institutions in Indonesia.
Prospera combines advisers who have extensive knowledge of Indonesia, with those who have experience in the Australian public service or emerging markets.
Prospera is a grant-funded partnership between Australia’s Department of Foreign Affairs and Trade, and Indonesia’s Coordinating Ministry for the Economy. The program is delivered by Cardno, an Australian professional services company.
Economics and Inclusion
In a decade or so, Indonesia will be one of the world’s 10 largest economies. But growth is not fast enough to create jobs for all those who need them. Poverty has fallen sharply, but 18 million people still live on less than US$1.90 a day and many more are at risk whenever food prices spike. Prospera supports the government achieve stronger and more inclusive growth with evidence-based analysis.
The national budget is stretched. The government needs to spend billions of dollars improving infrastructure and paying for public services such as education and healthcare. Yet Indonesia raises only one-tenth of its gross national income in tax—relatively little for an economy at its stage of development. Prospera supports the government raise more revenue through reforms to the tax system.
Indonesia’s national budget amounts to more than US$150 billion a year, but not enough of it goes to the areas that contribute most to public services. Improved audits and analysis of public expenditure help the government to identify savings so that the budget stretches further and benefits more people. Prospera supports the government to make spending more effective through better budget systems.
A financial sector that channels domestic savings into investment in factories, machinery and other productive assets is key to faster economic growth. But without supervision and regulation, financial growth and stability are put at risk. Prospera supports Indonesian authorities develop a financial sector that benefits the real economy while preserving stability and preventing financial crime.
A globally competitive economy requires well-regulated markets that have access to goods, services, skilled labour and the latest technology. Greater market participation and inclusion helps the economy reach its full potential. Prospera supports the government to regulate markets in ways that promote trade and investment so that private-sector firms can drive growth.
Governments depend on the civil service and other public-sector agencies to design and execute policy. In Indonesia, government reform can be challenging because of institutional resistance to change and other obstacles. Prospera helps the government to improve the capacity of civil service agencies to deliver sound policies.
Economic success in Indonesia—a sprawling archipelago of some 13,500 islands that stretches 5,300 km—depends on transport that is safe, secure and reliable. More than 80 million people fly on domestic routes in Indonesia each year. More than 600 million tonnes of goods are unloaded at the country’s ports. Prospera supports the authorities to make air, sea and land transport safer.
Shared economic opportunities
Prospera believes that a close economic partnership between Australia and Indonesia boosts prosperity by creating opportunities from which the people of both countries can benefit.
Merchandise trade between the two economies is worth more than A$10 billion a year. In 2017 Indonesian exports to Australia totalled A$4.2 billion, including crude oil, wood, clothes, electrical equipment, and paper.
Australia is a major investor in Indonesia’s economy, creating jobs, business opportunities and transferring skills. In 2017 Australian firms’ direct investment in Indonesia rose to A$680 million, the highest for three years.
One in four Indonesian students who study at a university overseas choose Australia. More than 20,000 Indonesian students enrolled in Australia’s world-class universities and vocational training centres in 2016-17.