By: Gavin Asadit )*
Indonesia has once again demonstrated an innovative step in addressing the gap in inclusive financing through the initial issuance of Orange Bonds by PT Permodalan Nasional Madani (PNM). As part of the global sustainable finance initiative, Orange Bonds are here to encourage gender equality and financial access for vulnerable groups, especially underprivileged women. Amidst this momentum, Danantara, a state wealth management institution that was just established earlier this year, is taking a strategic role in encouraging systemic transformation towards a more inclusive and equitable financial ecosystem.
Orange Bonds are investment instruments based on ESG (environmental, social, governance) principles with a strong emphasis on gender equity. Introduced through a global movement called the Orange Movement, these bonds are supported by a number of international institutions such as the Impact Investment Exchange (IIX), Ford Foundation, ANZ, and Nuveen. Indonesia, through PNM, is the first country in Southeast Asia to issue this instrument on a large scale. The funds raised reached IDR 16 trillion, consisting of conventional bonds of IDR 6 trillion and sharia-based sukuk worth IDR 10 trillion.
This issuance received full support from Danantara as a sovereign wealth fund tasked with optimizing the economic and social value of a number of strategic SOEs. As a shareholder in PNM, Danantara plays an important role in strengthening governance, assisting the issuance structure, and building a long-term impact monitoring framework for the instrument. Danantara’s Chief Investment Officer, Pandu Patria Sjahrir stated that Orange Bonds are a concrete form of synergy between social missions and modern financial market mechanisms. He also explained that the transformation of financial inclusion cannot run without innovation, Orange Bonds are Indonesia’s answer to the gap in access to capital, especially for women ultra-micro entrepreneurs in Danantara fully supports this initiative as a milestone for change.
As the direct implementer of the issuance, PNM targets all proceeds from the bonds to be used to expand the reach of the Membina Ekonomi Keluarga Sejahtera (Mekaar) and Mekaar Syariah programs which have reached more than 15.8 million female customers throughout Indonesia. PNM’s President Director, Arief Mulyadi explained that the issuance of Orange Bonds is a concrete manifestation of the institution’s commitment to empowering women as agents of economic growth. Furthermore, the company wants to expand public awareness that investment can provide measurable social impacts, and Orange Bonds are not just financial instruments, but a medium of empowerment.
These orange bonds consist of three series, each with different tenors and coupons. The first series has a tenor of 370 days with a coupon of 6.25 percent, the second series has a tenor of three years with a coupon of 6.65 percent, and the third series has a tenor of five years and a coupon of 6.85 percent. For mudharabah sukuk, the profit sharing indication also follows the same structure. Both instruments have received an idAAA rating from PEFINDO, indicating market confidence in the stability and governance of the company.
International recognition also accompanies this issuance. Impact Investment Exchange (IIX) Chief Operating Officer Angela Ng said that Indonesia has taken a bold and strategic step in leading change in the region, where PNM has shown how financial institutions can act as catalysts for inclusion.
This strategic step has also received appreciation from government circles. The Coordinator of the Expert Team of the National Secretariat of SDGs Bappenas, Yanuar Nugroho, said that Orange Bonds are in line with the national roadmap in achieving sustainable development goals. Financing innovations like this are our way of catching up in funding SDGs. The government noted that the gap in SDGs financing in Indonesia reached IDR 24,000 trillion by 2030. The presence of instruments such as Orange Bonds is believed to be able to significantly reduce this gap.
Danantara itself does not stop at institutional support alone. This institution is also preparing a digital platform to monitor the impact of all financing related to sustainable financial instruments, including Orange Bonds. This platform will present real-time data on fund allocations, beneficiary profiles, and socio-economic achievements generated. This initiative is part of a strategy for greater transparency and accountability, which are important prerequisites for growing market confidence.
Furthermore, Danantara also plans to expand the Orange Bonds ecosystem by encouraging private financial actors such as banks, fintech, and social enterprises to issue similar instruments. Danantara Strategy Director Della Rina stated that the success of PNM should bein a positive precedent because it is not a government monopoly and the potential impact will be much greater if the private sector is involved.
However, challenges remain. Not all institutions have sufficient understanding of measuring social impact, especially those related to gender equity. Therefore, Danantara together with OJK and IIX are preparing training modules and technical guidelines to help other institutions develop adequate ESG frameworks. This training will target investment management companies, regional development banks, to cooperatives and microfinance institutions.
On the other hand, this instrument opens up opportunities for global investors who have been targeting impact investing, but face limited credible and measurable instruments. With global standards and high transparency, Orange Bonds have the potential to attract funds from institutional investors, pension funds, and results-based philanthropy. The government through the Ministry of Finance is also considering fiscal incentives to expand the participation of issuers and investors.
Given the scale of its impact, Orange Bonds are not only a fundraising tool, but also Indonesia’s financial diplomacy strategy on the global stage. As the first country in Southeast Asia to officially adopt it, Indonesia is seen as leading the way in equitable financial innovation. With strong support from Danantara, the potential for expansion of this instrument to other sectors such as education, health, and social infrastructure is wide open.
)* The author is an observer of social and community issues
