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Development partnership in Indonesia

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Prosperity in Indonesia

Australia-Indonesia Partnership for Economic Development (PROSPERA)

$259 million, 2018 - 2026

Australia's economic governance program aims to foster more effective Indonesian economic institutions and policies that contribute to strong, sustainable and inclusive economic growth. PROSPERA commenced on 1 March 2018 and builds on over 20 years of Australian investment in Indonesia's economic governance that began in the aftermath of the Asian Financial Crisis of the late 1990s. PROSPERA activities are delivered by Australian Government agencies and contracted advisers working with around 30 Indonesian counterpart agencies.

Indonesia is defining its progress as a nation through the next medium-term development plan, in the region as Chair of ASEAN in 2023, and globally through participation in G20 and the emerging Indo Pacific Economic Framework. ASEAN’s focus includes recovery and rebuilding, energy and food security, digital economy, financial stability, and health architecture. The Indo-Pacific Economic Framework has four pillars: trade, supply chains, clean energy and fair economy. Prospera will work with the Indonesian Government to support these priorities to advance strong, sustainable and inclusive economic growth in Indonesia. Additional information on the program can be found on the PROSPERA website.

Indonesia-Australia Comprehensive Economic Partnership Agreement Economic Cooperation Program (IA-CEPA ECP) – Katalis

$40 million, 2020 – 2025

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) entered into force on 5 July 2020. It included a new Economic Cooperation Program known as ‘Katalis’.

Katalis aims to maximise the mutual benefits of IA-CEPA, support two-way trade and investment, improve market access, and promote inclusive economic growth in Indonesia. In particular, Katalis will support IA-CEPA implementation in the agrifood, advanced manufacturing and services (including skills) sectors.

Katalis is playing an important role in post-COVID economic recovery in both Indonesia and Australia. With an emphasis on industry engagement, Katalis will position both countries well to increase trade and business linkages as growth returns after COVID.

Related documents

Name of document Year published Type
Katalis Fact Sheets May 2021 Fact sheet

Related links

Australia-World Bank Indonesia Partnership (ABIP)

$30 million, 2020 - 2024

The Australia-World Bank Indonesia Partnership (ABIP) is a 5-year, single-donor trust fund with the World Bank in Indonesia. It aims to support the Government of Indonesia’s efforts to increase inclusive economic growth. ABIP works across the following three priority themes, with a focus on gender equality:

  1. Accelerating Human Capital Development - focused on education quality and better nutrition outcomes, as well as activities to promote more and better jobs and a strengthened social protection system.
  2. Improving Economic Governance and Mobility - focused on evidence-based policy making, better government spending and improved revenue collection.
  3. Building More and Better Infrastructure - focused on connectivity, energy, local infrastructure, and infrastructure finance.

ABIP takes a twin-tracked approach to gender equality, by mainstreaming gender across all activities and undertaking specific interventions to enhance gender equality in Indonesia.

ABIP operates in line with Indonesia’s National Medium Term Development Plan (2020-2024), and by coordinating with DFAT’s bilateral investments. ABIP’s core work is delivered through analytical and policy advisory work, knowledge exchange, project design and implementation support, and collaborative analysis.

Related documents

Name of document Year published Type
Australia-World Bank Indonesia Partnership Independent Mid-Term Review Feb 2023 Independent evaluation and management response

Supporting Climate Change Integration and Environmental Sustainability in Indonesia

$2.5 million, 2023 - 2026

This umbrella investment is supporting climate change integration across the Indonesia bilateral development program. Australia is:

  • providing an additional contribution to the World Bank's Sustainable Landscape Management Multi-Donor Trust Fund (SLM MDTF), co-funded by Australia and Norway.
  • integrating climate change across the Indonesia bilateral development program, and building internal capacity, knowledge and expertise on climate change.
  • providing an additional contribution for the Indonesia Marine Plastics Innovation Hub, implemented by CSIRO initially under the Maritime Capacity Building Initiative (MCBI).

Indonesia Australia Infrastructure Partnership (KIAT)

$300 million, 2017-2026

Kemitraan Indonesia Australia untuk Infrastructure (KIAT) is a partnership between Australia and Indonesia to support sustainable and inclusive economic growth through improved access to infrastructure for all people in Indonesia.

Through KIAT, we support the development of high-quality infrastructure projects in water and sanitation, roads and transport; promote regulatory reforms to address impediments to infrastructure investment; and build the capacity of government bodies responsible for infrastructure delivery.

KIAT works with various partners to strengthen dialogue between government and civil society to ensure that women and other vulnerable groups are consulted in the planning, design, implementation, and evaluation of infrastructure projects.

KIAT also provides implementation support for the Palembang City Sanitation Project and the Water and Sanitation Grants Program (Watsan Hibah).

KIAT works to improve the reliability and safety of water provided by local water utilities. KIAT activities have generated employment opportunities in the infrastructure sector for unskilled and low-skilled Indonesians during the recovery phase, including for women and people with disabilities.

Following an independent Mid-Term Review in 2021, KIAT was extended for a second phase of four years to June 2026. In this second phase, KIAT is expanding its infrastructure activities in the areas of climate change, urbanisation and private sector participation.


Related documents

Name of document Year published Type
Indonesia Australia Partnership for Infrastructure (KIAT) Phase 1: Mid-Term Review and Management Response August 2021 Mid-Term Review

Related links

Palembang City Sewerage Project (PCSP)

$45 million, 2017 - 2024

The Palembang City Sanitation Project is upgrading the sanitation system in Palembang City, South Sumatra Province, Indonesia. It is co-financed by the Australian and the Indonesian governments. The project pilots a more effective model to finance, build and manage municipal infrastructure in Indonesia's three levels of government. This will increase local government ownership and contribute to more enduring and better maintained infrastructure.

The project will build a wastewater treatment plant in Palembang City with capacity for up to 21,700 property connections. Upon completion, the project is expected to provide 12,000 property connections (connecting houses/businesses to the sewerage network) benefiting 100,000 people (approximately 5 per cent of the city population) and provide desludging of septic tank effluent for an additional 50,000 households (250,000 people).

The project contributes to Palembang City’s economy during Indonesia’s recovery from COVID-19. More than 1,400 people have been employed during construction of the wastewater treatment plant, pump stations and main sewer lines. The construction of secondary sewer lines and household connections by the Palembang City government will continue to create job opportunities. Small and medium enterprises also benefit through a range of direct contracts. Jobs targeted at women and people with disabilities have helped to spread the economic benefits.

This project is a component of the Asian Development Bank's Metropolitan Sanitation Management Investment Project (MSMIP), a Government of Indonesia initiative supported by an ADB loan to provide large-scale municipal sewerage. The total project value is USD168.83 million. Other cities supported by MSMIP are Makassar, Jambi and Pekanbaru, to reach up to 44,300 property connections, benefitting 221,500 people.

Additional information regarding the MSMIP and PCSP can be found on the Asian Development Bank and KIAT websites.

Related documents

Name of document Year published Type
PCSP design document 2017 Design document

Related links

Water and Sanitation Hibah Phase 2 and the Performance Based Grants for Water Utilities

$93.6 million, 2012 - 2024

Through the Water and Sanitation Hibah Program, Australia works with Indonesia to increase water and sewerage connections across the country. We work with local governments to boost investment in infrastructure. The program uses an innovative approach where local governments are reimbursed up to 45 per cent of connection costs following verification that the connection had functioned for at least three months.

Water Hibah has partnered with 144 local governments to provide water connections to over 317,000 houses benefitting approximately 1.4 million people. The program successfully demonstrated a model that the Government of Indonesia has rolled out nationally with $369 million of its own funds after Water Hibah concluded in 2016. Sanitation Hibah aims to increase the number of sewerage connections in up to eight cities. We achieved 13,800 new sanitation connections (9,100 households in the first phase and 4,700 households in the second phase of the program).

Recognising that water utilities are the key to sustainable drinking water supply systems; Australia developed and now funds the Performance-based Grants for Water Utilities (PBG) program.

PBG works with 17 local governments to support their water utilities to improve the quality of water services and manage their expanding water networks. Each local government co-invests $1 million (on average) in their utilities to achieve improvements against the PBG’s performance areas. The program has seen improvements in water quality and quantity, business planning, client servicing, reduced leakage in delivery pipes and energy efficiency.

PBG has supported water utilities to implement new chlorination regulations and community hygiene behaviour-change activities, important for preventing the spread of COVID-19. Support for improved governance, financial management and operational efficiency will underpin the viability of water utilities and longer-term recovery from the economic impact of COVID-19.

Related documents*

Name of document Year published Type
Indonesia Water and Sanitation Initiative - Phase 1 Concept Note 2009 Concept note
Indonesia Development Cooperation Report 2010 Report
Indonesia Urban Household Water Supply and Sanitation Program - Direct Funding Agreement 2010 Agreement
Indonesia Urban Household Water Supply and Sanitation Program - Agreement with USAID 2011 Agreement
Indonesia Water and Sanitation Initiative - Phase 2 Concept Note 2011 Concept note
Indonesia Water and Sanitation Initiative - Independent Evaluation and Final Report 2011 Independent evaluation
Indonesia Water and Sanitation Initiative - Independent Evaluation and Final Report: Management Response 2012 Evaluation management response
Indonesia Water and Sanitation Hibah: Independent review 2017 Review

Asian Development Bank Sustainable Infrastructure Assistance Program II (SIAP 2)

$40 million, 2019 - 2024

Australia has partnered with the Asian Development Bank (ADB) to deliver high quality infrastructure technical advice and loan preparation since 2013 through the Sustainable Infrastructure Assistance Program (SIAP) trust fund.

SIAP2 supports effective identification, preparation, implementation and financing of infrastructure projects. The program: (i) assists in the preparation of sovereign and non-sovereign infrastructure projects leveraging ADB infrastructure related project financing and co-financing; (ii) provides enhanced project implementation support; and (iii) provides knowledge support for infrastructure planning and financing and effective program management.

Priority sectors are energy, transport, urban services and water resources. Priority themes are innovation and new technologies, private sector development, innovative infrastructure financing, sound public sector management, climate resilience, gender equity and partnerships.

SIAP2 also contributed to the implementation of ADB’s broader support to Indonesia’s COVID-19 response and recovery efforts. This included technical assistance for contingent financing for disasters including from future waves of the pandemic as well as support for a low carbon and resilient COVID-19 economic recovery.

Related link

ADB Sustainable Infrastructure Assistance Program Documents

Building Relationships through Inter-cultural Dialogue and Growing Engagement (BRIDGE)

$9.5 million, 2019 - 2026

The Building Relationships through Inter-cultural Dialogue and Growing Engagement (BRIDGE) program aims to build people-people links between Indonesians and Australian teachers, students and school communities by selecting Australian and Indonesian teachers to participate in an international program that focuses on improving the teaching practices and cross-cultural understanding between participants. The program has been operational in Indonesia and implemented since 2008 by the Asia Education Foundation of the University of Melbourne. Three main activities include:

  • selection and pairing of participant schools and teachers
  • in-Australia Program and establishment of school partnerships, and
  • ongoing communication and support.

The program focuses on maintaining existing school partnerships and establishing new sustainable ones.

Australia Awards in Indonesia Program

*$70.7 million, 2014 - 2022

Australia Awards scholarships are offered to the next generation of Indonesian leaders for development. Through study and research, recipients develop the skills and knowledge to drive change and help build enduring people-to-people links with Australians.

Leading Australia Award Scholarship recipients from Indonesia (and PNG) may be eligible to receive an Allison Sudradjat Prize, awarded to outstanding scholars and current or emerging leaders, or a Hadi Soesastro Prize, awarded to PhD recipients from Indonesia who are undertaking high-level research at an Australian university

Engagement with alumni (including those who self-fund their study) upon their return to Indonesia continues to be a high priority for the program. The aim is to foster a strong alumni network in Indonesia and a network of advocates for Australia, particularly for the quality of an Australian education.

* the figure only covers activities undertaken in Indonesia and does not include tuition fees and other costs occurred in Australia.


Australia Indonesia Youth Exchange Program (AIYEP) (Phase II)

$0.5 million, 2023 - 24

The Australia-Indonesia Youth Exchange Program (AIYEP), established in 1982, links youth (21-25 years old) in Australia and Indonesia through social, professional, and cultural exchange. It is a chance for participants to grow their intercultural skills, professional experiences, and international networks. AIYEP is one of The Australia-Indonesia Institute’s (AII) longstanding DFAT programs that contribute to the important work of building bridges of understanding between Australia and Indonesia.

In Australia, Indonesia AIYEP participants develop their leadership skills and gain valuable work and intercultural experiences. In Indonesia, the Australian participants develop their leadership skills and contribute to community development projects.

Phase II of AIYEP is returning to in-person programming, which is a very welcome return to business as usual.

Australia Indonesia Muslim Exchange Program (AIMEP) (Phase II)

$0.5 million, 2023 - 24

The program focuses on building a greater understanding for Australians of the nature of mainstream Islam in Indonesia and, for Indonesians, a greater awareness of Australia’s multicultural society.

Investing in Women: Women in Inclusive Sustainable Economic Recovery (IWISER)

$56 million (multi-country), 2023-2027

Investing in Women: Women in Inclusive Sustainable Economic Recovery (IWISER) will support selected countries in Southeast Asia to position women at the centre of post-pandemic inclusive economic recovery and accelerate opportunities to advance women’s economic empowerment. The program seeks to address multiple drivers of women’s economic empowerment through strategies and activities that tackle systems and structures, as well as resourcing influential institutions, advocates and champions who can help to accelerate the momentum for change. Building on the success and learnings of the Investing in Women program IWISER will continue to work on influencing business practices for workplace gender equality, tackling adverse social norms, and using blended finance instruments to move capital with a gender lens. IWISER will direct targeted support to selected focus areas and local reform agendas that will have a significant impact.

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