Reviewing Stimulus Package to Promote Green Growth in Indonesia: Input for Low Carbon Development in 2022 Budget Year

Coordinator:
Team Member: M. Sulton Mawardi, Akhmad Ramadhan Fatah, Hening Wikan
Completion Year:
2020
Area:
Indonesia
Topic:
Economic Policy, Environment & Climate Change

Description & Progress

Background

To mark the beginning of initiative on promoting green growth at the national scope, the Government of Indonesia (GoI) integrate low carbon development into National Medium-term Development Plan (Rencana Pembangunan Jangka Menengah Nasional/RPJMN) 2020-2024. Consequently, the development targets of selected sectors in the RPJMN must consider the carrying capacity of the environment. Some of the sectors include forestry and peatlands, agriculture, coastal and sea, energy, transportation, waste management, and climate resilience.

However, this initiative faces significant challenge as the coronavirus outbreak has hit hard the global economy. Many governments around the world, as well as the GoI, are now focusing their programmes more on both controlling the spread of the virus and managing the country to recover from the pandemic-caused economic downturn. While well-intentioned, the strategy that follows poses some risks to sustainable development going forward, especially by sidelining the allocated budgets initially allocated for low-carbon long-term projects.

On the contrary, the country's ongoing battle against coronavirus can be seen as an opportunity to rebuild Indonesian economy towards the greener one. Following the crisis, a wave of economic recovery efforts should be able to build tougher community resilience and more inclusive fiscal stimulus. The comprehensive stimulus package that allows high-emissioned "bussiness as usual" being transitioned into more advanced low-carbon economy is key to not only tackling the Covid-19 crisis but also emerging stronger action plan.

To develop such stimulus package, it is important to address the existing policies that already promote green growth in Indonesia.

 

Objective

The main objectives of reviewing those policies are firstly to identify the current state of stimulus package that support low carbon development and secondly to identify what needed to be done to reach the national targets as well as the global commitment.

 

Methodology

  1. Review budgeting policy on low carbon development of each relevant ministry/institution (including, but not limited to Ministry of Energy and Mineral Resources, Ministry of Environment and Forestry, Ministry of Ocean and Fisheries, Ministry of Agriculture, Ministry of Industry, Ministry of Tourism and Creative Industry, Ministry of Industry) for the period of 2018, 2019 and 2020, to identify the budget that was allocated to support Low Carbon Development.
  2. Review existing regulations and non-budgetary policies of the relevant ministries that are intended to or affecting incentive to business players in adopting low carbon development practices. These include sustainable financing framework.

Share it