Indonesia’s economy has grown five-fold since the mid-1980s, and was enjoying five percent growth annually before the COVID-19 pandemic. However, the benefits of Indonesia’s economic progress remain unevenly distributed, with many individuals living in or near poverty, and the pandemic seems to be furthering this divide.
Significant linkages exist between poverty, education, and health. The U.S. Agency for International Development (USAID) provides financial assistance and technical expertise to improve economic growth and education throughout Indonesia. Our work in these sectors is specifically designed to break the chain of poverty and provide support to Indonesia becoming more self-reliant and resilient. Our work in education and economic development have helped transform generations of Indonesian families and communities.
USAID partners with the Government of Indonesia, civil society organizations, communities, academia, development partners, and others to improve lives and reduce poverty. Between 2019 and 2021, USAID was challenged to continue its programs during the pandemic. However, we can point to several accomplishments:.
- USAID provided financial and technical support to the Ministry of Education, Culture Science and Technology to improve its workforce development programs. With USAID assistance, 52,000 youths became more employable, and more than 12,000 youths reported new or better employment.
- USAID, private sector partners, and the Indonesian Employers Association, APINDO, collaborated to develop, publish, and disseminate a set of “Guidelines for Equality and Inclusivity in the Workplace” to APINDO’s 14,000 member companies.
- In partnership with the U.S. Development Finance Corporation, 2021 USAID began a loan guarantee activity that has disbursed $34,000 to 40 students and $8.5 million to 4,173 healthcare providers and suppliers to purchase essential goods and medical supplies.
Increased Workforce Productivity
Through direct grants and technical assistance to universities and governmental organizations USAID improves the ability of people and educational institutions to meet the demands of the Indonesian workforce now and in the future. Many of our workforce development activities are designed specifically to improve the lives of those who are most vulnerable to poverty—specifically women, young people, and people with disabilities.
Supporting Secondary Vocational Education
USAID funding supports 25 vocational high schools in greater Jakarta that have partnered with businesses. The project benefits both teachers and students; teachers receive training in the needs of business, and students develop practical business and industry skills and earn internships in high-demand industries such as manufacturing, information, communications, technology, maritime, creative industries, and tourism.
Supporting Workforce Development
In a joint effort with the West, Central, and East Java provincial and district governments USAID designed programs with schools and training centers to empower low-income youth aged 18 to 34, women, and youths with disabilities to gain job skills and learn entrepreneurship. In 2020, approximately 47,000 people improved their employability through these USAID-supported workforce development programs and 12,000 reported new or better jobs. In addition, USAID directly distributed $90,000 in small grants to more than 710 women and disabled entrepreneurs, thus supporting efforts to create jobs and increase inclusive economic growth.
As a way of making higher and vocational education available to more people, USAID is leveraging up to $16 million in loan guarantees for investors and financial institutions to give student loans. This financing will unlock education opportunities and lead to better employment for thousands of Indonesians and eventually lead to better employment for them.
Supporting Higher Education
USAID continues to support improvements to the effectiveness of Indonesia’s ability to manage scholarships, build university networks, and undertake sustainable system-level reforms of policies and practices.
Strengthening Public and Private Capacity to Expand Economic Growth
USAID efforts to reduce constraints to economic opportunity strengthen Indonesia’s ability to improve the business environment. Reducing barriers to trade and foreign investment will allow Indonesia’s economy to flourish.
Improving Government Economic Planning
In an effort to help the Government of Indonesia accelerate economic growth, USAID’s Economic Growth Support Activity (EGSA) provides technical advice on ways to improve public financial management and to make it easier to start and operate a business.
The EGSA has proposed several changes to trade barriers, and with USAID assistance, Indonesia has implemented a new system, called SAPER, to conduct economic planning. Thus far, 14 Government of Indonesia offices and agencies have received technical assistance to improve their policies and practices, and modifications have been made to 28 regulations. In addition, USAID is working with the government to revise regulations that govern 126,000 savings and loan cooperatives to make it easier to lend money to owners of small and medium-sized enterprises, which will both improve the business environment and increase economic growth.
In partnership with the U.S. Development Finance Corporation (DFC), USAID’s loan guarantees promote the market economy. One of our loan guarantees allows Indonesian healthcare providers and suppliers to provide medical care to individuals to obtain and distribute essential medical goods, particularly in response to the pandemic. Similarly, through the INVEST activity USAID has sourced $30 million in investment opportunities and engaged 17 companies (and signed agreements with six) to promote investments through debt, debt and equity, and equity investments.
Also in partnership with the DFC, USAID launched a multiyear activity to offer loans to students, education providers, and distributors of essential medical care and goods. The target i to disburse $16 million to students and $40 million to healthcare providers and essential goods distributors to purchase medical supplies and personal protective equipment.