The G20 Presidency of Indonesia: With Great Trust Comes Great Responsibility

The G20 (Group of Twenty) was formed in 1999 when the monetary crisis severely hit Asia, which had been previously applauded as a region with the most promising economic potential. It was upgraded to the Leader’s Summit in 2008 when the global financial crisis (GFC) hit the US and made serious impacts on the international economy. The G20 played its key role as crisis responder to the two economic crises and led entire nations to survive the crises.

Now is the time for Indonesia to ensure that the G20 can help the world survive another unpredicted difficult crisis. It has been two years since the COVID-19 pandemic affected all aspects of human life in early 2020. Under the presidency of Indonesia, the G20 must formulate the best and comprehensive recovery strategies to effectively restore productivity and strong growth. At the same time, the G20 is also responsible for laying a solid foundation for accelerating green growth, in line with the global leaders’ commitment pledged at the 2021 United Nations Climate Change Conference (COP26). In this respect, the indicators of recovery do not only include inclusive and strong growth, high productivity, massive job creation, access to quality health facilities and the return of education to normalcy, but also the need to ensure that the overall recovery process shall not endanger the planet and future generations.

Three main priorities

The theme of the G20 presidency of Indonesia is Recover Together, Recover Stronger. Under its leadership, Indonesia wants to lead the G20 to build common efforts to make a stronger recovery from the COVID-19 crisis and enable sustainable and inclusive growth across the world. The expected primary outcome is a comprehensive exit strategy to support recovery, with a concrete and doable action plan.

Three major agendas have been selected as key pillars to formulate the strategies to accelerate this sustainable, inclusive and strong recovery: the global health architecture, economic and digital transformation, and energy transition.

For the first agenda, particular attention will be paid to efforts to ensure global health system resilience and to develop a global pooling resource mechanism for pandemic prevention, preparedness and response (PPR); initiatives for harmonizing global health protocol standards; technology transfer and equitable access to vaccine, therapeutics, and diagnostics production. In particular, Indonesia is offering to play a role as the COVID-19 mRNA vaccine technology transfer hub to Asia. As its short-term goal, the G20 will help to achieve the ambitious target of 70% of the total population to be vaccinated by mid-2022. In the long run, this agenda will strengthen global health governance and architecture in the post-pandemic era.

The second agenda is economic and digital transformation specifically designed to restore the post-pandemic global economic order by leveraging digitalization. Indonesia will lead the G20 to focus on creating digital economic value to accelerate economic recovery, particularly to support the development and financial inclusion of MSMEs (micro-, small- and medium-sized enterprises). Other focuses include the development of digital literacy and skills, digitization of sectors that constitute sources of new economic growth potential for the acceleration of economic recovery, and the necessity of global data governance. It is hoped that there will be better understanding of global data governance and the creation of economic value through the utilization of digital technology.

The third agenda is the energy transition aimed at strengthening the global sustainable energy system and a just transition. The priority issues include the expansion of energy access which focuses on clean cooking, electrification and small island countries, the escalation of viable clean technologies implementation, and the intensification of the financing of the energy transition. The immediate target of the presidency is to achieve a global deal on the acceleration of energy transition. This deal will contribute to the long-term agenda for supporting the global commitment to achieving the net zero emissions commitment. Indonesia’s presidency wishes to demonstrate that the G20 shall take a higher degree of responsibility for supporting the global leaders’ commitment at COP26, following the legacy of the Italian presidency that put the protection of the planet as one of its priority agendas.

The G20 presidency of Indonesia will organize around 150 meetings at different levels including one Summit, 19 ministerial meetings, 7 Sherpa (deputy) meetings, 70 working group meetings, and 51 engagement group meetings, as well as several relevant side events.

Priority issues in the Finance Track

To support the theme of Recover Together, Recover Stronger, the Finance Track envisages the realization of three ambitious targets in the post-pandemic era. The first is a more productive and balanced global economy that will be promoted through an even recovery and an enhanced efficiency in the economy. The second is a greater financial and monetary system stability which will be achieved through the increase of financial system resilience and macroeconomic stability. The third is broader equality and sustainability through sustainable and inclusive growth.

To strengthen recovery and sustain inclusive growth, the Finance Track addresses six priority issues. The first is the exit strategy to support recovery, which includes a macro exit policy and a financial sector exit policy. The second addresses the scarring effect in real and financial sectors to secure future growth. The third is the digital payment system, with particular attention paid to cross-border payment and central bank digital currencies (CBDC) by exploring macro-financial implications and options for cross-border interlinking.

The fourth priority issue is sustainable finance which covers the discussion on the incorporation of transition finance in the sustainable finance alignment, the development of market infrastructure to enhance accessibility and affordability of sustainable finance, and the development of policy levers to incentivize financing and investment to support sustainable development. The fifth consists of digital financial inclusion and SME (small and mid-sized enterprise) financing, with attention on to how to harness digitalization to improve productivity and inclusion, especially for underserved communities, the implementation of a framework for High Level Principles for Digital Financial Inclusion policy options to leverage digital financial services, and good practices to improve financial services for SMEs.

The sixth issue is international taxation, which addresses the international tax package, tax certainty, tax transparency, tax and development, environment and tax, and tax and gender.

Priority issues in the Sherpa Track

There are four priority agendas in the Sherpa Track: (1) Devising a comprehensive exit strategy to support recovery; (2) Meeting the vaccination target; (3) Transforming the economy with the benefits of digitalization; and (4) Securing access to technology and funds for energy transition. The priority issues are selected carefully by the Indonesian presidency to reflect the urgent needs for finding exit strategies to support inclusive and strong recovery that will create a conducive environment for future generations.

Every working group develops specific priorities according to its main responsibilities. For example, the Health Working Group addresses the global preparedness and response, the health system transformation, and antimicrobial resistance. The Digital Economy Working Group focuses on connectivity and post COVID-19 recovery, digital skills and literacy, and cross-border data flow and data-free flow with trust.

The Energy Transition Working Group concerns itself with strategies for securing energy accessibility, scaling up smart and clean technology, and advancing energy financing. The Environment and Climate Sustainability Working Group is responsible for discussing the environment and climate change-related issues and identifying strategies to support more sustainable recovery, enhance land-and-sea-based actions to support environment protection and climate objectives, mobilize resources to protect the environment and achieve climate objectives.

The Employment Working Group discusses sustainable job creation in the context of the changing world of work, including the labor market and affirmative decent jobs suitable for persons with disabilities, human capacity development for sustainable growth and productivity improvement, and adaptive labor protection. The Development Working Group pays attention to strategies to strengthen recovery and resilience to withstand future crises, to scale up the innovative financing instrument for sustainable development, to renew global commitment to multilateralism for sustainable development and to coordinate the G20’s achievement in the implementation of SDGs.

Particular attention is also paid to the tourism sector which has suffered considerably because of the COVID-19 pandemic outbreak since early 2020. The Tourism Working Group carries an important role to support the revival of the tourism sector through the innovative and creative economy in tourism, and strengthening the community as agents of change for tourism transformation in the post-pandemic era.

As the pandemic has also caused the decline in international trade volume and foreign direct investment, the Trade, Investment and Industry Working Group (TIIWG) aims to address the obstacle of international trade and investment. A stronger multilateral system for a robust global recovery, reliable global value chains for “building back better” and incentivizing sustainable investment are three main specific issues to be discussed. The Indonesian presidency also proposes the inclusion of industry to be discussed in this group, adding to the initiative of renaming the TIWG to TIIWG. The acceleration of industry 4.0 for inclusive and sustainable industrialization has been chosen as a priority issue.

The Finance and Health Joint Task Force (FHTF)

Health has become the most pivotal issue during the pandemic. At the Rome Summit in 2021, G20 leaders agreed to set up a special task force with a mandate to strengthen global preparedness in bringing the pandemic under control through prevention, preparedness and response (PPR). G20 leaders have also agreed to work closely with the World Health Organization (WHO) to ensure every nation should have fair access to vaccines, therapeutic and diagnostic production and facilities.

The formation of the Task Force is highly significant for securing pathways to recovery as the condition of health constitutes necessary foundations for the exit strategy. No-one will be safe until everyone has been vaccinated. The first and immediate responsibility is thus to find the best possible ways to ensure that 70% of the total world population will be vaccinated by mid-2022. If this is not accomplished, the recovery process will take longer.

The FHTF consists of representatives of the G20 Finance Ministries and Health Ministries and coordinates closely with the WHO. At the first meeting in December 2021, the Task Force set up a work plan and a road map, formed a secretariat in the house (headquarters) of the WHO, and addressed the PPR financing gap between countries. The first meeting highlighted the importance of the FHTF to support collective efforts to strengthen global coordination and cooperation in addressing the current pandemic and anticipating similar unpredictable pandemics in the future.

Outreach to include other nations

Outreaching to non-G20 members has been used as a strategy to respond to the critique of exclusivity which refers to having a very limited number of members, by addressing the interests of all countries in the world instead. Indonesia has invited the Netherlands, Spain, Singapore, and the United Arab Emirates to participate in the G20 meetings.

Appearing on the list of invitees are also several regional organizations which had been traditionally invited in previous presidencies. The Democratic Republic of Congo joins the G20 meetings to represent the African Union, Cambodia to represent ASEAN, and Rwanda to represent the New Partnership for Africa’s Development (NEPAD). Based on its privilege as the holder of the G20 presidency, Indonesia has invited Fiji to represent the Pacific Islands Forum (PIF), and has invited the Islamic Development Bank (IsDB) and the Asian Development Bank (ADB) to contribute to the negotiation process along with the G20’s longstanding partners such as the International Monetary Fund, the World Bank, the OECD (Organisation for Economic Co-operation and Development), the International Labour Organization, and the WHO.

What does the G20 Presidency mean for Indonesia and the region?

Indonesia holds its role of the G20 presidency in high esteem, with President Joko Widodo proudly suggesting that it means a form of trust and honor given by global leaders to Indonesia: “This trust is an opportunity for Indonesia to contribute more to the global economic recovery, to build a globally sounder, fairer and more sustainable governance based on independence, perpetual peace and social justice.” He also highlighted that under Indonesia’s presidency, the G20 will articulate the aspirations and interests of developing countries.

The Coordinating Minister for Economic Affairs has echoed the President’s message, saying that the G20 Presidency is a privilege that brings great responsibility. Indonesia must now show its global leadership competence to the worldwide community and determine the global agenda setting. Indonesia bears the responsibility to set its presidency as the momentum of global transformation to build the post-pandemic global economy and health architecture better. Indonesia must strengthen key sectors in the economy through the G20 in trade, investment, employment, agriculture, health, education, human capital, and MSMEs. Indonesia must also convey its leadership by ensuring that the achievement of the UN Sustainable Development Goals (SDGs) 2030 target is on track.

The G20 presidency has philosophical and constitutional meaning as well. In 1945, the founding fathers of the Indonesian republic envisaged a visionary role according to which the country must contribute actively to the establishment of a world order, based on freedom, perpetual peace and social justice. Here comes the golden opportunity to translate the constitutional mandate into reality.

The Minister of Finance has highlighted the importance of Indonesia in the G20’s presidency in designing an economic policy to support recovery. As the largest emerging economy among ASEAN members that has a stable political system, Indonesia can exercise its leadership to shape highly strategic policies that affect the global economy.

Indonesia’s chairmanship in the G20 is also very important for ASEAN members and the Pacific Islands Forum (PIF). Three ASEAN members will be at the negotiation table along with G20 members, representatives of many leading international organizations and other invitees. The G20 priority agendas reflect ASEAN’s high priority interests. The first is to help all ASEAN members to survive the pandemic, find the best exit strategies to make a strong recovery and subsequently further pursue the regional integration that will deliver welfare for all of the nations in the region. For island countries in the south Pacific, the Indonesian presidency of the G20 brings new hope: the island countries will not only recover from the pandemic, but also survive the threat of climate change. The recovery strategy shall thus also lay strong foundations to protect all forms of human life from natural catastrophes caused by the failure of global leaders to agree on which concrete actions to take in order to tackle current climate change.

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Dr. Yulius Purwadi Hermawan is a lecturer in International Relations at Parahyangan Catholic University, Bandung, Indonesia and consultant for international development cooperation and foreign policy inputs. He has been researching on G20 issues since 2010.

The views expressed in this article are not necessarily those of Heinrich Böll Stiftung