Indonesia calls for nearly 11 million USD investment in green projects

Investment Minister Bahlil Lahadalia meets with Taiwanese electronics manufacturer Foxconn and battery swapping developer Gogoro on October 22 last year, in Taiwan, to discuss the manufacturers' interest in investing in Indonesia's electric vehicle industry.(Photo courtesy of Indonesia’s Investment Ministry)

Jakarta – Indonesia’s Investment Ministry has put on offer 47 "sustainable projects' worth over 155 trillion Rp (10.83 billion USD) 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 said the projects cover four sectors including manufacturing, infrastructure, economic zones, and tourism. The first three are valued at around 50 trillion Rp each, whereas the latter is worth 5.78 trillion Rp.

He said 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.

Investment is one of Indonesia's key growth drivers, helping to create jobs, which in turn boost purchasing power and consumer spending. According to Statistics Indonesia (BPS), the country's Gross Domestic Product (GDP) grew by 3.69 percent last year, largely thanks to a rebound in investment.

President Joko Widodo has recently instructed his ministers to increase investment attraction and set a target of attracting 1.2 quadrillion Rp this year, up a third from 900 trillion Rp last year.

However, this Southeast Asian country is said to be not highly competitive for green development projects. The environmental problems associated with the expansion of mining and afforestation sites increase the risks to these investments.

Meanwhile, regulatory issues - from subsidies and licensing to land acquisition - also drive up the financial costs of renewable energy projects and make Indonesia less competitive than other countries in Asia.

According to a 2021 report by the International Energy Agency (IEA), the cost of funding renewable energy in developing countries, including Indonesia, is seven times higher than in the US and Europe, with a higher level of risk.

Indonesia's electricity production is under the control of the state-owned Power Corporation PLN and is still dominated by coal power plants, which account for 63 percent of total electricity production, while the share of renewable energy is only 11 percent. The IEA report also said that the average cost to produce one MW of solar power in Indonesia is 65 and 10 percent higher than that of India and Thailand.

Deputy Investment Minister Nurul Ichwan said the Indonesian government will promote these projects through the G20, as well as Indonesian embassies around the world. The department will also publish pre-feasibility studies online, but will limit the content so investors can show serious commitment.