By: Kira Putri )*
Sustainable investment is a top priority in facing the challenges of climate change and global economic dynamics. Indonesia, with abundant natural resources, continues to strive to develop a green economic ecosystem to achieve inclusive and sustainable growth. The government is actively creating fiscal policies that support green investment, both through regulations, financing schemes, and international cooperation.
In the 2024-2045 National Long-Term Development Plan (RPJPN) document, the vision of Indonesia Emas 2045 emphasizes sustainable development. Green economic transformation is one of the main pillars in increasing national competitiveness, while reducing negative impacts on the environment. To realize this, various policies have been implemented, including strengthening regulations and incentives for industries that adopt environmentally friendly practices.
In the energy sector, the Government is targeting an increase in the renewable energy mix by 23% by 2025 and 31% by 2050, as stated in Presidential Regulation Number 112 of 2022. Deputy for Coordination of Economic Cooperation and Investment, Edi Prio Pambudi, assessed that this policy not only aims to reduce environmental risks, but also opens up new economic opportunities. He highlighted that the clean energy transition requires large investments, as projected by BloombergNEF, namely USD3.1 trillion per year until 2050.
In addition, the Government also continues to develop carbon trading mechanisms to utilize Indonesia’s great potential. The Nusantara Carbon Scheme (SKN) is one of the initiatives aimed at increasing the role of the forestry sector in reducing greenhouse gas (GHG) emissions. Optimization of carbon trading is carried out by increasing human resource capacity, setting competitive carbon prices, and strengthening regulations to ensure the sustainability of this scheme.
Other concrete steps in encouraging green investment are carried out through various strategic projects. The government has implemented initiatives such as Carbon Capture and Storage (CCS), Just Energy Transition Partnership (JETP), and the development of a circular economy. By utilizing renewable energy resources such as solar, hydro, geothermal, and bioenergy, Indonesia has a great opportunity to become a center for clean energy development in the region.
However, the transformation towards a green economy still faces various challenges. One of them is the need for large funding and regulations that need to be more aligned. The government continues to carry out institutional reforms to create more integrated and non-overlapping regulations. Various incentives have been implemented to attract investment in the renewable energy sector, including subsidies and flexible financing schemes through cooperation with global financial institutions.
Green funding is an important instrument in achieving the net zero emissions target by 2060. In 2024, the government succeeded in increasing green funding to IDR 20.15 trillion through cooperation with the German Bank Kreditanstalt für Wiederaufbau (KfW). Hashim Djojohadikusumo, Special Envoy of the President of the Republic of Indonesia, emphasized that this agreement is a step forward in accelerating the development of clean energy in Indonesia. The memorandum of understanding between PT PLN and KfW shows Indonesia’s commitment to attracting foreign investment to support the national energy transition.
In implementing this policy, PLN, as the main player in the electricity sector, continues to strengthen synergy with international partners. PLN’s President Director, Darmawan Prasodjo, emphasized that the company has initiated various strategic projects to accelerate the development of renewable energy-based electricity. PLN’s involvement in green projects also opens up wider opportunities for foreign investment, which is expected to create a more sustainable and competitive energy ecosystem.
In the industrial sector, the Government is also trying to encourage the implementation of green industry principles as part of a long-term strategy. Member of the Indonesian House of Representatives from the PKS Faction, Meitri Citra Wardani, assessed that industrial sustainability is an important factor in creating more environmentally friendly economic development. To that end, the Government has launched the Green Industry Assessment Program, which provides certification to companies that meet sustainability standards. Fiscal incentives, such as tax reductions and investment facilities, also continue to be provided to encourage more companies to switch to green industry practices.
Global collaboration is a key factor in supporting the success of this program. The government continues to strengthen bilateral and multilateral cooperation in the green investment sector, both through technology transfer, capacity building, and funding. This effort is in line with the strategy to increase Indonesia’s competitiveness in the global market and accelerate the achievement of targets.t sustainable development.
The Government’s efforts in encouraging green investment reflect a long-term vision to create a more resilient and inclusive economy. With the right combination of policies, regulatory reforms, and synergy with various stakeholders, Indonesia is on the right track to becoming a leader in the green economy in the region.
The commitment to creating an investment ecosystem that supports sustainable development will provide long-term benefits, both for the national economy and the welfare of the community. The strategic steps that have been taken are expected to make green investment the main foundation in Indonesia’s economic transformation towards a more sustainable future.
)* The author is a public policy observer
