Innovation and investment for inclusive sustainable economic development (ISED)

Project description

Title: Innovation and investment for inclusive sustainable economic development (ISED)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Indonesia
Lead executing agency: Indonesian Ministry for National Development Planning (BAPPENAS)
Overall term: 2017 to 2021


Indonesia’s economy has grown by four to six per cent in recent years. This growth is relatively high, but not high enough to create sufficient employment opportunities. This is affecting the country’s young population in particular. There is a stark difference in the potential for growth and employment opportunities between urban and rural areas. Skilled professionals who meet requirements and demand are lacking on the Indonesian labour market. Labour demographics are characterised by a high number of unskilled workers. Furthermore, there is an imbalance between supply and demand for skilled labour, and a lack of mechanisms guaranteeing a link between supply and demand in line with need. Against this background, Indonesia is at a competitive disadvantage throughout the ASEAN (Association of Southeast Asian Nations) region.


The programme develops the capacity of private sector actors in selected economic sectors to create inclusive employment.


The Innovation and Investment Programme for Inclusive and Sustainable Economic Development (ISED) addresses the issue of employment using instruments such as an integrative approach to employment promotion, vocational training and inclusive business. In doing so, it harnesses the potential of both private and state actors to create employment and train people in line with their capacities and potential. The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, as the implementing organisation, set up this programme in cooperation with the Indonesian Ministry for National Development Planning (BBAPPENAS) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Indonesian Government.

ISED operates at both national and regional level and in various sectors of the economy.

At national level, ISED supports the Indonesian Government in reforming vocational training. This reform is being initiated through political consultation and dialogue.

At regional and technical level, ISED operates in three core areas and supports implementation of an integrated approach to promoting employment comprising the establishment and development of needs-based vocational training in close cooperation with the private sector, promotion of sustainable and integrative business models while ensuring a link between economic demand and the supply of skilled workers, and the creation of cooperation models promoting inclusive, sustainable employment. The first field selected for this approach was sustainable tourism, and the first project region the island of Lombok in Nusa Tenggara Barat province. The second field is manufacturing, with a focus on the food and beverage industry. The experience gained at regional and technical level is continuously fed into the development of relevant national agendas.