Indonesia Joins New Development Bank: A Strategic Move for Economic Growth

Jakarta’s recent decision to join the New Development Bank (NDB), formerly known as the BRICS Bank, marks a significant step in Indonesia’s pursuit of accelerated economic transformation. Announced following a meeting between President Prabowo Subianto and NDB President Dilma Rousseff at the State Palace on March 25, 2025, this move positions Southeast Asia’s largest economy within a multilateral framework designed to fund sustainable development and infrastructure projects. With an initial capital of US$100 billion, the NDB offers a potential lifeline for Indonesia’s ambitious growth plans, but questions linger about the financial commitments and strategic implications of membership.

A Partnership for Progress

President Prabowo Subianto expressed optimism about the partnership during a press statement released on the day of the meeting. “I have decided to join the New Development Bank and follow its procedures and requests summoned upon us” he said. He further emphasized the potential of the NDB to act as a “strong booster” for Indonesia’s economic transformation strategy, highlighting the alignment between the bank’s objectives and national priorities.

Dilma Rousseff, who has led the NDB since 2023, reciprocated the enthusiasm, noting that bringing Indonesia on board was a priority due to its significant regional influence. Her presence in Jakarta underscored the bank’s intent to expand its footprint beyond the original BRICS members—Brazil, Russia, India, China, and South Africa—who established the institution in 2015. Since then, the NDB has welcomed Bangladesh, the United Arab Emirates, and Egypt as full members in 2021, with Uruguay poised to join once formalities are complete.

The New Development Bank: A Financial Powerhouse

The NDB was created to address the financing needs of emerging economies, particularly in the Global South, with a focus on infrastructure and sustainable development. Its initial capital of US$100 billion is divided into 1 million shares, with the five founding members collectively holding at least 55% of the equity to maintain control over strategic decisions. Each founding member owns approximately 18.98% of the shares, while newer entrants hold smaller stakes ranging from 1% to 2.3%.

To date, the bank has approved US$39 billion in financing for 120 projects across its member states, with China receiving the largest share at US$8.1 billion, followed by India, South Africa, Brazil, and Russia. Transportation infrastructure accounts for roughly half of the disbursed funds, excluding emergency assistance provided during the COVID-19 pandemic. Looking ahead, the NDB aims to issue green, social, and sustainability debt instruments by 2030, signaling a commitment to environmentally conscious financing.

The bank’s strategy also includes maintaining a presence in key funding markets by issuing benchmark bonds in both major hard currencies and local currencies of member countries. This approach could benefit Indonesia by facilitating access to capital in Indonesian Rupiah, potentially reducing exposure to foreign exchange risks.

Indonesia’s Economic Ambitions

Indonesia’s decision to join the NDB comes on the heels of its full membership in the broader BRICS grouping, which was formalized in January 2025 under Prabowo’s nascent presidency. Jakarta had initially expressed interest in joining BRICS in 2023, reflecting a long-term strategy to align with alternative global economic frameworks amid shifting geopolitical dynamics. As Southeast Asia’s largest economy, Indonesia brings considerable weight to the NDB, with its GDP growth targets and infrastructure needs aligning closely with the bank’s mandate.

Under Prabowo’s leadership, Indonesia has prioritized economic transformation through large-scale infrastructure projects, renewable energy initiatives, and industrial modernization. Membership in the NDB offers access to a pool of capital that could fund these initiatives, potentially easing the burden on domestic budgets and reducing reliance on traditional lenders like the World Bank or Asian Development Bank, which often come with stringent conditions.

Economist Arif Budimanta, in an analysis published on March 24, 2025, underscored the NDB’s potential to reshape financing for South-South cooperation. “With a capital of $100 billion, the NDB hopes to shift the landscape of financing demands on sustainable development and infrastructure, especially for South-South countries” he noted. However, he cautioned that Indonesia’s membership would require a capital deposit and payment of fees, alongside the development of a pipeline of sustainable projects to justify the investment.

Opportunities and Challenges

Joining the NDB presents Indonesia with a unique opportunity to tap into a financing mechanism tailored to the needs of developing economies. Unlike traditional Western-led institutions, the NDB emphasizes equality among its founding members and prioritizes projects that align with national development goals. For Indonesia, this could translate into funding for critical infrastructure—such as ports, railways, and renewable energy facilities—that are essential for sustaining economic growth projected at around 5% annually over the next decade.

Moreover, the NDB’s focus on sustainability aligns with Indonesia’s commitments under the Paris Agreement to reduce carbon emissions and transition to cleaner energy sources. With the bank planning to issue green bonds by 2030, Jakarta could position itself as a leader in sustainable development within the ASEAN region, leveraging NDB funds to support initiatives like solar power expansion or forest conservation programs in Kalimantan and Sumatra.

However, challenges remain. The financial obligations of membership, including capital contributions and fees, could strain Indonesia’s fiscal resources at a time when the government is already grappling with post-pandemic recovery and rising public debt. While exact figures for Indonesia’s stake have not been disclosed, newer members typically hold smaller equity portions, which may limit Jakarta’s influence over the bank’s decision-making compared to the founding BRICS nations.

Additionally, there are geopolitical considerations. The NDB, rooted in the BRICS framework, is often viewed as a counterweight to Western-dominated financial institutions. By aligning more closely with this group, Indonesia risks navigating a delicate balance between its traditional partnerships with the United States and Europe and its growing ties with China and Russia, both of whom wield significant influence within the NDB. Public and political reactions to this shift will likely shape the narrative around Prabowo’s decision in the coming months.

Regional Implications

Indonesia’s entry into the NDB could have ripple effects across Southeast Asia, potentially encouraging other ASEAN nations to explore membership. Countries like Thailand and Vietnam, which face similar infrastructure and development challenges, may view Indonesia’s move as a precedent for engaging with alternative financing mechanisms. This could strengthen regional economic integration while diversifying funding sources beyond traditional bilateral and multilateral lenders.

At the same time, Indonesia’s participation enhances the NDB’s credibility as a global institution. As the fourth most populous country in the world and a key player in the G20, Indonesia brings demographic and economic heft to the bank’s portfolio. Rousseff’s emphasis on Jakarta’s regional influence during her visit suggests that the NDB sees Indonesia as a gateway to broader engagement with ASEAN, a bloc representing over 650 million people and a combined GDP of approximately US$3.6 trillion.

Looking Ahead

As Indonesia formalizes its membership in the New Development Bank, the focus will shift to the practicalities of engagement—identifying priority projects, negotiating funding terms, and integrating NDB resources into national development plans. President Prabowo Subianto’s administration faces the dual task of leveraging this opportunity for economic gain while managing the financial and geopolitical risks associated with closer alignment to the BRICS framework.

For now, the decision has been met with cautious optimism among policymakers and analysts in Jakarta. Whether the NDB can truly serve as a catalyst for Indonesia’s economic transformation remains to be seen, but the partnership signals a bold step toward redefining the country’s role in the global financial landscape. As the details of this collaboration unfold, all eyes will be on how Indonesia balances ambition with pragmatism in its pursuit of sustainable growth.