FINANCING GREEN INDUSTRIES: Incentives for Environmental Investment in Indonesia. Laksmi Dhewanthi Assistant Deputy Minister for Incentive and Environmental Fund State Ministry of Environment International Conference on Green Industry in Asia Manila, Phillippines, 9-11 September 2009.
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FINANCING GREEN INDUSTRIES: Incentives for Environmental Investment in Indonesia
Assistant Deputy Minister for Incentive and Environmental Fund
State Ministry of Environment
International Conference on Green Industry in Asia
Manila, Phillippines, 9-11 September 2009
Indonesia is of the view that Financing the environment is essential
This is Indonesia, …......
This is also Indonesia......
pollution and natural degradation are not just environmental challenges and that the economic consequences of environmental problems require a long-term response, because:
developing countries have limited options as they could not shift resources from their development agenda and poverty alleviation to environmentally sound.
affect countries’ spending priorities, revenue raising opportunities, insurance markets, investment options & capital markets.
to develop innovative approaches to financial/fiscal activities related to environment, esp. climate change adaptation and mitigation
such as new policies, incentives, and integrating approaches
POLICIESas well as MARKETFAILURES
(subsidized growth, distorted energy prices, no pollution cost)
are main causes of the current environmental problems
MONETARY INCENTIVE SCHEMES
FOR ENVIRONMENTAL MANAGEMENT IN INDONESIA
Alternatives source of fund
Reduced Loan Interests
No Compliance Fees
i.e. BI regulation no. 2/2005 and Circulate Letter of BI No. SEBI No 7/3/DPNP which includes inclusion of environmental performance within bank credit policy i.e. create direct financial disincentive for PROPER’ participating companies;
EXPERIENCES AND LESSONS LEARNED
Environmental related industries, MSMEs
Environmental Soft Loan Schemes
of investment (1997-2002)
increase resource efficiency and utilization of waste
Success factors commitment, trust & active role of stakeholders, availability of criteria and standard, HRD, and risks sharing.
Utilization of loans by type of Investment (2007)
Still, need to address
FURTHER DEVELOPMENTS: Taking Benefits from Climate Change Regime
Cost and level of environmental degradation
early prevention is cheaper (Stern)
$1 now prevent $40 future
Newly Indonesian Act on Environmental Protection and Management of 2009
Overview of development of incentive instruments
for the environment
PRACTICE 1 - Analysis of EFR instruments
Diagram based on Emerton, L. et al. (2006) Sustainable Financing of Protected Areas, IUCN and Fischer, A. / Petersen, L. / Hubbert, W. (2004): Natural Resources and Governance: Incentives for Sustainable Resource Use, GTZ).
for further information:
Assistant Deputy for Incentive and Environmental Fund
State Ministry of Environment, Republic of Indonesia
A Building, 4th floor, Jl D.I PanjaitanKav 24
Kebun Nanas - Jakarta 13410 INDONESIA
Tlp/Fx. +62 21 851716