The government is aiming to draw billions of dollars in green investments, which is expected to help the country maintain sustainable growth in the future.
Investment Coordinating Board (BKPM) head Franky Sibarani said the agency planned to attract at least US$100 billion in investments in seven sectors that have the potential to develop environmentally friendly businesses by 2019.
The seven sectors are agriculture, forestry, fisheries, geothermal energy, manufacturing of environmentally friendly products, power generation using new sources of energy or renewable energy and waste management.
“To support the growth of green investment, the government has provided a number of facilities, both fiscal and non-fiscal,” Franky said during the Tropical Landscapes Summit in Jakarta on Monday.
He referred to fiscal incentives that included a tax holiday of between five and 10 years for several pioneer industries such as biofuel and renewable resources as well as a recently issued regulation on incentives in the form of a tax allowance for 143 business sectors. For non-fiscal incentives, policies such as one-stop service for licensing under the BKPM, ease of immigration permits for expatriates and the establishment of a special economic zone in 11 new locations.
The BKPM recorded that from 2010 until 2014, the realization of direct investment in the seven potential green sectors reached $41 billion.
Green investment in projects related to the energy sector, such as geothermal power plant projects or regular coal-fired power plant projects using high-end and clean supercritical technology, would be the driver for achieving the $100 billion investment target by 2019, Franky said.
Indonesia, which is estimated to have abundant resources of renewable energy, remains dependant on non-renewable fossil fuel to energize its economy. Meanwhile, development of renewable energy such as geothermal — of which Indonesia is estimated to have potentially 29,000 megawatts worth — has been hampered by financial issues as the projects are usually far more expensive than dirty-yet-cheap resources such as coal.
Under its ambitious program, the government aims to increase the electricity generating capacity to 35,000 MW within five years. Out of the total projects, as much as around 60 percent will be generated by coal-fired power plants.
During his keynote speech opening the summit, Vice President Jusuf Kalla called on investors interested in doing business in Indonesia to focus on the new resources and added value sector, as the country aims to maintain growth and at the same time preserve its environment.
“Whoever wants to invest in Indonesia must do so with green investment. If they want to develop power plants, more geothermal projects must be focused on. If they want to exploit minerals, they must work on smelters,” Kalla said.
