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Indonesia proposes $11b in green projects amid regulatory issues
Regulatory issues — from subsidies, licensing to land acquisition — have kept financing costs high for renewable energy and made Indonesia less competitive than other countries in Asia.
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Eco-friendly energy: Two technicians of state-owned oil and gas giant PT Pertamina work on a geothermal power plant in West Java. (Courtesy of Pertamina)
T
he Investment Ministry has put on offer 47 projects worth over Rp 155 trillion (US$10.83 billion) that are deemed environmentally friendly and located across the archipelago, as the government aims to tap into the growing global sustainable finance market and boost the economy.
Investment Minister Bahlil Lahadalia, speaking at the launch in Jakarta on Thursday, said the projects were spread over four sectors with the largest coming from manufacturing, followed by infrastructure, economic zones and then tourism. The first three are valued at around Rp 50 trillion each, whereas the latter is worth Rp 5.78 trillion. He did not elaborate on how these projects were “sustainable”.
He went on to say that the projects' pre-feasibility studies were already completed and that there were double the amount of projects on offer compared with the 22 offered two years ago. The minister gave an assurance that investors only needed to focus on bringing their technology and capital.
"Let us do all of your permits," he said.
Indonesia relies on investment as one of the main engines for gross domestic economic (GDP) growth, hoping it will create jobs, which could boost purchasing power and consumer spending. Statistics Indonesia (BPS) data show that GDP rose 3.69 percent in 2021, driven largely by a rebound in investment.
President Joko “Jokowi” Widodo has instructed his ministers to attract more investment every year. He has set a target of Rp 1.2 quadrillion in investments this year, up by a third from Rp 900 trillion last year.
The country, however, made it not very competitive for green development projects. Environmental problems surround the expansion of mining and plantation sites, carrying high risks for investment. Regulatory issues — from subsidies, licensing to land acquisition — have kept financing costs high for renewable energy and made Indonesia less competitive than other countries in Asia.
