After BRICS, Indonesia is seeking to gain membership of the Organisation for Economic Co-operation and Development (OECD), an economic organization that brings together countries with established economic policies and governance.
Established in 1961, the OECD aims to promote sustainable economic growth, strengthen global trade, and improve living standards in its member countries.
The organization has 38 member nations, including the United States (US), Japan, South Korea, and European Union (EU) countries. The members jointly set policy standards in sectors such as economics, taxation, investment, labor, and education.
An OECD membership is often considered a "mark of quality" for a country, as it shows that the country meets high standards of economic well-being and governance.
OECD members are expected to carry out reforms to increase transparency, bolster legal systems, and create more investment-friendly economic policies.
Joining the OECD would have big implications for Indonesia, both in terms of international competitiveness and domestic policies.
The step is seen as a grand strategy to raise the national economy to a more competitive level. At the same time, it is an effort to attract investment and escape the middle-income trap.
However, despite the benefits, there are also challenges that must be critically examined.
Joining the OECD is considered a gateway to becoming a developed country. OECD policy standards have proven to have a positive impact on member countries.
For instance, South Korea succeeded in accelerating industrialization and increasing economic competitiveness after joining the organization in 1996.
The country also experienced a significant increase in foreign direct investment (FDI) and managed to accelerate reforms in the finance sector and business regulations.
The same things are possible for Indonesia if it uses the accession as a chance to accelerate structural reforms that have been moving slowly.
Increasing credibility
The main opportunity that being an OECD member offers is increased credibility in the eyes of global investors.
So far, many global companies are still hesitant to invest in Indonesia due to regulatory uncertainty, complicated bureaucracy, and low legal certainty.
Joining the OECD will force Indonesia to adjust its economic policies to global standards that are more transparent and accountable.
This would have a direct impact on improving the investment climate and the entry of larger foreign investment, especially in strategic sectors such as manufacturing, green energy, and technology.
The OECD also offers a platform that can strengthen Indonesia's economic diplomacy. As the largest economy in Southeast Asia, Indonesia is often at the crossroads of interests between global economic powers such as the United States, the European Union, and China.
An OECD membership can bolster Indonesia's negotiating hand in international trade agreements and increase its bargaining power in setting global economic policies.
This is becoming more relevant considering that trade competition between major countries is getting tighter. Hence, developing countries like Indonesia must have a stronger strategy in responding to global dynamics.
Therefore, the Indonesian government is becoming more serious about showing its commitment to transformation efforts to become a developed country by accelerating the OECD accession.
The Coordinating Ministry for Economic Affairs is continuing to coordinate with several ministries and agencies as well as OECD officials and member countries to prepare Indonesia's Initial Memorandum—an important stage in the accession—for the OECD Ministerial Council Meeting.
To accelerate this process, the Indonesian delegation led by Coordinating Minister for Economic Affairs Airlangga Hartarto, accompanied by the Indonesian Ambassador to France, Muhammad Oemar, made a working visit to Paris, France, from March 3–5, 2025.
The minister met with the French Minister for the Economy, Finance, and Industrial and Digital Sovereignty, Eric Lombard; OECD Secretary-General Mathias Cormann; and several ambassadors of OECD member countries.
"The series of meetings reflects Indonesia's commitment and seriousness in transforming into a developed country, implementing serious structural reforms that are needed and are in line with OECD standards," he said.
Large-scale reforms
Indonesia's accession to the OECD has received support from several parties.
Chair of the Inter-Parliamentary Cooperation Agency (BKSAP) of the House of Representatives, Mardani Ali Sera, has also conveyed the full support of the BKSAP for Indonesia's OECD accession process.
However, behind the great potential of a full OECD membership, there are serious challenges that need to be considered. Joining the OECD is not merely about obtaining a membership: it would also mean carrying out major reforms in various sectors.
One of the main challenges is that Indonesia's economic regulations and policies still contain many distortions. Many policies are not in line with OECD principles, especially those concerning business competition, taxation, and labor.
For example, as per the OECD report on labor market regulations, Indonesia still has structural obstacles to creating optimal labor flexibility, particularly when it comes to the wage system and labor protection, which often hamper the growth of the formal sector.
Apart from that, being a member of the OECD comes with big consequences in terms of fiscal transparency and taxation reforms.
Indonesia will be required to adjust to OECD standards in the global tax system, including the global minimum tax policy that is currently being implemented in various countries.
This reform could be a challenge for Indonesia, which still faces a low level of tax compliance and high dependence on indirect taxes such as value-added tax (VAT) and excise.
Without proper preparations, the pressure to raise tax standards could result in an additional burden on small and medium enterprises, which are the backbone of the country's economy.
Besides the economic ramifications, social and political aspects must also be taken into account. The reforms needed to meet OECD standards will not only impact the business side but also the society.
One of the risks that needs to be anticipated is the impact of liberalization policies that could widen social disparities.
The OECD study shows that in many cases, aggressive economic reforms without social mitigation can worsen income disparity and access of vulnerable groups to basic services, such as education and health.
If Indonesia wants to adopt OECD-style policies, it must ensure that social protection measures remain its top priority.
Important lessons
Not all countries that join the OECD immediately gain significant economic benefits. Some countries, such as Mexico and Chile, have had a hard time in the adaptation process after accession.
Despite following OECD standards, Mexico still struggles with structural challenges such as corruption, social inequality, and weak legal institutions.
This is an important lesson for Indonesia to keep in mind: an OECD membership is not an instant solution to economic problems, but rather a long journey that requires consistency in policy implementation.
From the geopolitical perspective, Indonesia's accession to the OECD could also potentially give rise to new dynamics in international relations.
Indonesia has so far played the role of an economic power that is relatively independent and does not strongly lean toward either the Western or Eastern bloc.
Joining the OECD, whose members are mostly developed countries from Europe and North America, could be seen as Indonesia's step to move closer to the West.
This could have an impact on trade relations with China, which is currently the country's largest trading partner. If not managed well, tensions could arise in Indonesia's trade policies with several partner countries.
Indonesia needs to learn from other countries that have successfully navigated accession to the OECD with a mature strategy. South Korea, for instance, not only adopted OECD standards but also ensured that the reforms carried out were in line with its domestic situation.
It managed to maintain its strategic industrial policies as well as increase economic openness.
Indonesia must adopt a similar approach, wherein the reforms that it carries out still consider the national interests and do not only follow OECD standards blindly.
At the end of the day, there is big potential to accelerate economic growth, increase investment credibility, and strengthen economic diplomacy for Indonesia through OECD accession.
However, there are also risks. Reforms must be prepared thoroughly so as not to trigger side effects that could worsen social inequality or weaken the competitiveness of certain sectors.
Indonesia must ensure that the accession is not merely a diplomatic achievement, but truly a strategic step to enhance the national economy and make it more advanced and sustainable.
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Editor: Rahmad Nasution
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