Ahead of OECD Accession, Government Prepares Regulatory Reforms for Regional Development

The Government is preparing reforms to the regulatory framework for regional development as part of Indonesia’s accession process to the Organisation for Economic Co-operation and Development (“OECD”). The reforms include amendments to the Regional Government Law and the Spatial Planning Law, as well as the drafting of the Draft Bill on Archipelagic Regions and the Draft Bill on Urban Development.

Medrilzam, Deputy for Regional Development at the Ministry of National Development Planning/National Development Planning Agency (“PPN/Bappenas”), said that these measures constitute homegrown reforms, or reforms driven by domestic initiatives. “At the same time, Indonesia is reforming its regulatory framework for regional development. These are homegrown reforms, and the accession process comes at the right time, providing valuable input to help us strengthen and refine the direction we have already set,” Medrilzam said.

In addition to drafting and revising regulations, the Government is also promoting the implementation of the Village Law and the Law on Financial Relations between the Central Government and Regional Governments (Hubungan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah - “HKPD”). Strengthening the HKPD framework is considered important given the continued high level of regional dependence on central government transfers, while regional fiscal capacity remains uneven.

According to Medrilzam, Indonesia’s OECD accession process could serve as a catalyst for strengthening the regional development framework, including public investment and innovative financing. The regulatory reforms are also intended to bring regional development policies into greater alignment with international standards through the OECD’s Regional Development Policy Committee (“RDPC”) review process and to support the achievement of the Golden Indonesia 2045 vision.