Tuesday, April 16, 2024 | 12:59 WIB

Analysts on advantages and disadvantages of Indonesia becoming OECD member


Jakarta, IO – A number of experts highlighted Indonesia’s candidacy as the new member of the Organization for Economic Cooperation and Development (OECD).

Some economists believe that this will be beneficial for Indonesia’s branding in the eyes of investors, per Katadata, Friday (23/2).

Bank Permata chief economist Josua Pardede said the image of OECD as an open international organization would attract global investors to Indonesia.

“Not only that, policymakers also have the opportunity to obtain knowledge transfer from developed countries so that they can facilitate structural reform going forward,” said Josua.

Nevertheless, Josua also reminded all and sundry that Indonesia needs optimize policies based on data and facts to expand the scope of benefits before joining the OECD because without a clear policy, the benefits of joining will be very limited. Moreover, the organization is very dependent on how Indonesian policies can align with OECD priorities, namely inclusive growth, health and Sustainable Development Goals (SDGs).

“If Indonesia’s future policy direction focuses in that direction, then Indonesia’s membership in the OECD can be realized more quickly,” said Josua.

This was also echoed by the Center of Economics and Law Studies (Celios) director Bhima Yudhistira. He especially pointed out that Indonesia’s domestic policies must be in sync with OECD standards.

“There are many rules that must be synchronized with OECD standards. There are many regional regulations and laws that must be liberalized, especially related to licensing, business competition and trade,” said Bhima.

He was worried that this could be a blunder because even though the doors to trade are wider, protection for MSMEs may be weaker. Moreover, Indonesia now has the Job Creation Law. Bhima said that Brazil even had to harmonize more than 200 regulations when it was seeking OECD membership.

Nevertheless, Bhima believes that several standards adopted from the OECD can strengthen Indonesia’s position at the global level and bring in more investment opportunities from developed countries.

“Indonesia may be able to learn a lot from the OECD regarding how to prepare a better economic structure, for example strengthening the capacity of manufacturing and technology industries,” he said.

A different view was expressed by the Institute for Development of Economics and Finance (INDEF) senior economist Tauhid Ahmad. He is of the view that joining OECD will not provide direct benefits in terms of investment, trade or the economy for Indonesia.

However, he believes that Indonesia can benefit from geopolitical cooperation among the members. Tauhid envisages that the OECD can help with diplomacy or improve Indonesia’s bargaining position in trade.

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“The benefits are not very significant, but it would be great if Indonesia is accepted because it will be considered as a developed country. The impact is more geopolitical, for example it will strengthen Indonesia’s position in dealing with Europe regarding palm oil exports,” said Tauhid.

Currently, the OECD has 38 member countries, which largely comprise of developed countries and major economic powers. (un)


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