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Green transition guidelines missing in Indonesia’s economic recovery push
Indonesia's commitment to environmentally friendly and sustainable development is not for a want of trying. But will the government be able to go beyond economic recovery when private sector concerns are also factored in?
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Hundreds of activists and students take to the streets in Jakarta in the Climate Strike movement to demand that the government take climate change mitigation more seriously. (JP/A. Muh. Ibnu Aqil)
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n spite of its initial slow response to the current global crisis, the Indonesian government was quick to set up a national economic recovery (PEN) program to address any fallout from the COVID-19 pandemic.
However, upon closer examination of the program, there is little to suggest there is a strong commitment by the state to direct the country toward a “greener” economic recovery.
Data from Statistics Indonesia (BPS) has revealed that the Indonesian economy contracted 3.49 percent year-on-year in the third quarter of 2020, in what amounts to a slight recovery from the minus 5.32 percent growth at the half-year mark.
To support businesses and encourage spending, the state issued Government Regulation (PP) No. 23/2020 on the PEN program. It proceeded to reallocate funding from other budget posts, reaching a total of Rp 695 trillion (US$49.01 billion) as of Nov. 22.
From this sum, Rp 97.26 trillion has been allocated for healthcare spending, Rp 234.33 trillion for social safety net programs and Rp 65.97 trillion to support ministries and regional administrations.
A further Rp 114.81 trillion will come as incentives for micro, small and medium businesses, while Rp 62.22 trillion is for stimulus measures for state-owned enterprises (SOEs) and Rp 120.6 trillion is for business incentives.
In the energy sector, where renewable energy sources have yet to be seriously considered in the short and medium term, state-owned electricity firm PLN is set to receive Rp 45.42 trillion as part of what the government calls accelerated compensation under the PEN scheme. This comes in addition to the Rp 5 trillion in capital injections set aside from this year’s state budget.
