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As middle-income country, RI to adapt to new schemes
As some developed countries have started to end their environment-related grants to Indonesia because of the change in its status from a low-income to a middle-income country, the government needs to make adjustments to the partnerships
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span>As some developed countries have started to end their environment-related grants to Indonesia because of the change in its status from a low-income to a middle-income country, the government needs to make adjustments to the partnerships.
One of the examples is the government of Denmark, which will fully alter its type of environmental funding for Indonesia by the end of 2018 from government-to-government (G to G) to private-led, with the government becoming a matchmaker.
“We will take it to the next level [of partnership in Indonesia]. This is not the end and we will continue the collaboration in years to come,” Danish Ambassador to Indonesia Rasmus Abildgaard Kristensen said in his speech to open a conference themed “Green Opportunities in Indonesia: Engaging in New Partnership” on Wednesday.
The new type of partnership was actually introduced in 2015 as “strategic partnerships on climate and energy and on solid waste management and the circular economy”, which was worth 9.6 million Danish krone (US$1.45 million).
From 1998 to 2018, Denmark disbursed 580 million Danish krone in grants for three sectors: environment, energy and forestry. The grants were managed by the Danish embassy in Indonesia.
National Development Planning Minister Bambang Brodjonegoro said Indonesia is no longer entitled to grants as its economic growth in the last decade has been hovering at about 5 percent.
“By 2020, Indonesia is even projected to become an upper-middle-income country,” he said, adding that the government is also in talks to get green investments from Denmark’s Investment Fund for Developing Countries (IFU). “Hence, the suitable type of cooperation [with other countries] is an investment partnership.”
The minister said the type of financing schemes that would be utilized by Indonesia were soft loans, through which a borrower could get a much lower interest rate.
Bambang said he was confident the government is ready to adopt the new scheme, explaining that it is only a matter of preparing a detailed blueprint of Indonesia’s green projects.
Aside from Denmark, the Indonesian Climate Change Trust Fund (ICCTF), a fund-pooling institution under the National Development Planning Board (Bappenas), recorded that the United States and other European countries are also to soon gradually alter their environmental funding schemes.
“Generally, their support for climate change through grant schemes are to end between 2018 and 2020,” ICCTF environmental liasion Jakfar Hary Putra told The Jakarta Post on Wednesday.
Since 2010, the ICCTF has funded 76 environmental projects with a total of about $25 million.
When asked about the impact of the change in financing schemes, Jakfar said that the government still had to allocate other dedicated funds for any projects.
“Because usually the [foreign] loans could only cover 50 to 80 percent of the total project costs and we should seek the remainder from other sources, “ he said.
