Indonesia and Thailand have begun moves to join the Organization for Economic Cooperation and Development (OECD), known colloquially as the “Developed Countries Club.” Although there is no clear international definition of “developed countries,” the term generally refers to countries with high levels of income, education, and social welfare, as well as political stability and social maturity. Thailand aims to become a developed country by 2037 under its National Strategy 2018-2037, while Indonesia aims to achieve that status by 2045, the 100th anniversary of its independence, based on its Golden Indonesia 2045 Vision.
Before either country can join the OECD, however, there are a number of important steps they will need to take.
In February 2024, the OECD Council resolved to start accession discussions with Indonesia, and at the end of March, it adopted an accession roadmap, making Indonesia first candidate country in Southeast Asia. Meanwhile, Thailand submitted a letter of intent to the OECD in February 2024.
Expectations
In addition to earning the trust of foreign investors through membership in the OECD, Indonesia expects to improve economic efficiency and governance with standardization in taxation, labor regulations, environmental protection, and other areas, and to improve policies on poverty reduction and education quality improvement through transfer of knowledge and technology from developed countries. It is also the only G-20 country in ASEAN, so OECD membership would be an opportunity to expand its global influence.
Thailand, on the other hand, says joining the OECD would “elevate the country’s standards and help create a better quality of life for Thais,” according to Prommin Lertsuridej, secretary-general to the prime minister. The Thailand Development Research Institute (TDRI) estimates that the economic impact of OECD membership would amount to 270 billion baht ($7.36 billion), boosting GDP by 1.6 percent.
However, joining the OECD is no mere formality. After all, the organization is not simply aiming to expand; it seeks to apply its standards and policies on a global scale. Indonesia and Thailand will need to review their laws and regulations to meet the standards required by the OECD, while there are other hurdles they will have to clear on their own.
For example, the European Union has objected to Indonesia’s ban on raw minerals exports, saying it constitutes unreasonable export restrictions. Moreover, membership in the OECD requires the approval of all member states, and Indonesia would be the only member state that does not have diplomatic relations with Israel. In the ongoing conflict between Israel and Hamas, a majority of the Indonesian public is sympathetic to the Palestinians, their Muslim brethren. Nonetheless, the OECD has made the normalization of diplomatic relations with Israel one of the conditions for accession. The Indonesian government thus has the task of establishing diplomatic relations without provoking Islamist groups at home and abroad.
For Thailand, meanwhile, the challenges are democratization and human rights. The OECD emphasizes the maintenance of a fair and transparent judicial system and political pluralism, where different political opinions are respected. In terms of human rights, there is also a requirement for free expression of opinions and respect for peaceful demonstrations and protests.
Since the transition to civilian rule in the 2019 general election, Thailand has cracked down on anti-government demonstrations and criticism of the royal family, with many activists being arrested and detained. Moreover, the pro-democracy Move Forward Party, which won a landslide victory in the May 2023 general election, is on the verge of being dissolved because it fought the election campaign while advocating a revision of the lèse-majesté law.
Japan as a Bridge
In its 50th Anniversary Vision Statement issued in 2011, the OECD called for strengthening cooperation with developing countries. In 2014, the 50th anniversary of Japan’s accession, then-Prime Minister Abe Shinzo launched the Southeast Asia Regional Program (SEARP) in support of Southeast Asia’s national priorities, policy reforms, and regional integration. Strengthening relations between the OECD and ASEAN through policy dialogue, where Japan has acted as a bridge, resulted in the adoption of an accession roadmap for Indonesia and the application for membership by Thailand.
At the OECD Ministerial Council Meeting in May 2024, the 60th anniversary of Japan’s accession to the OECD, Prime Minister Kishida Fumio said that in order to take SEARP to a new level, he will mobilize around 8 million euros over the next three years to establish the Japan OECD-ASEAN Partnership Program (JOAPP). Kishida asserted that in order to maintain and improve the effectiveness and universality of OECD standards and to address global issues, the involvement of Southeast Asia, which has become an important global actor, is essential, noting that Japan could serve as a bridge between the two. Japan will be active in areas such as private investment, connectivity, sustainability, and the digital realm, for instance by dispatching experts, conducting research and analysis, and providing training.
Japan has been investing in Southeast Asia for more than 60 years. About 30 percent of the overseas subsidiaries of Japanese companies are located in ASEAN. A recent JETRO Survey found four of the top five risks in the ASEAN investment environment could be improved by OECD involvement and membership. Examples include “opaque policy management by the local government” (42.2 percent), “complicated administrative procedures” (41.4 percent), “inadequate and opaque operation of the legal system” (40.1 percent), and “complicated tax systems and tax procedures” (38.8 percent).
It would benefit Japan to connect ASEAN with the OECD as a true “co-creation partner.” Japan, too, clearly stands to benefit from the maturation and stabilization of ASEAN through the OECD.