Indonesia has embarked on a major economic transition. It has done so by launching in 2011 the MP3EI accelerated development and investment policy which by 2025 is expected to turn Indonesia into a major Asian economic power house and top-10 economy in the world. Projected targets require up to USD 400 billion over the lifetime of this policy. More than 50% of the required investment is to originate from domestic private funders and FDI. There are concerns that MP3EI development program may be at odds with the GHG emission reduction agenda which for the same time frame aims to reduce GHG emissions by 26%, manly through managing land use change, especially the conversion of forest areas. MP3EI places heavy emphasis on land-based projects and large-scale industrial investment. In this context, MP3EI is being presented in the mass media as a form of “green” development whereby the investment projects adhere to environmental guidelines and therefore does not contradict the emission reduction plans. This presentation examines the relationship between MP3EI investments and GHG emissions reduction objectives with a focus on the province of East Kalimantan, which constitutes one of the main sub-corridors of MP3EI.

1. “What shade of green? MP3EI and economic
development discourse in Indonesia
Obidzinski K., Komarudin H., Dermawan A., Andrianto A.
Wednesday, March 13th, 2013, Amazon Room, CIFOR
THINKING beyond the canopy

2. Indonesia Today
Source:
McKinsey
2012 THINKING beyond the canopy

3. ….and in 2030
Source:
McKinsey
2012 THINKING beyond the canopy

4. MP3EI: quantum leap forward
Source: MP3EI
THINKING beyond the canopy

5. USD 400 bln in overall investment
Kalimantan
Source: MP3EI
THINKING beyond the canopy

6. Emphasis on resource extraction
and processing
Main economic activity Sumatera Java Kalimantan Sulawesi Bali-Nusa Papua – Kep.
Tenggara Maluku
Steel  
Food and beverages 
Textile 
Transportation equipment 
Shipping  
Nickel  
Copper 
Bauxite 
Palm oil  
Rubber 
Food agriculture  
Tourism 
ICT 
Coal  
Oil and gas   
Jabodetabek Area 
Sunda Straits National Strategic Area 
Defense equipment 
Animal husbandry 
Timber 
Cocoa 
Fishery THINKING beyond the canopy
  

7. But there are some challenges
Source:
Strategic Asia
2012
THINKING beyond the canopy

8. “Green Economy”
•Allows for: economic growth but significantly
reduces environmental risks and ecological
scarcities
•Understands that:
We are reaching limits in our use of the
natural resources
ENV and SOC costs of our current
economic model must be taken into account
Need for a balance between growth,
income, jobs, ENV quality and equity
THINKING beyond the canopy

9. “Green Economy” cont
•Needs: Enabling conditions that make
green sectors attractive opportunities for
investors and businesses
•Enabling conditions:
Right mix of fiscal measures, laws, norms,
international frameworks, know-how and
infrastructure
What is currently in place in
Indonesia/East Kalimantan?
THINKING beyond the canopy

10. Steps towards a greener approach
Objective: bridge the gap between GHG national emission
reduction targets and impact of land based investments
Approach:
•Forest conversion and concession moratoria
•Low Carbon Growth Strategy
•GHG emission reduction actions (RAN/RAD-GRK; SRAP
REDD+)
•Certification (RSPO, ISPO, VPA-SVLK, FSC)
•Green Master Plan MP3EI project portfolios
THINKING beyond the canopy

11. “Green Nearly 1M Ha of
economy” forest in oil palm
challenges: concessions
oil palm
Oil palm concessions on:
land cover area_ha
Intact natural forest 165,592.75
Mangroves 34,274.25
Logged forests 651,877.50
Intact natural forest on peat 57,846.25
Logged forest on peat 79,758.25
total 989,349.00
THINKING beyond the canopy

12. “Green development” challenges:
Coal Mining
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
1998 2000 2002 2004 2006 2008 2010 2012
West Kalimantan Central Kalimantan East Kalimantan South Kalimantan
THINKING beyond the canopy

13. “Green 1.3M Ha of
remaining forest
economy”
cover in mining
challenges: concessions
coal mining
Mining concessions on:
land cover area_ha
Intact natural forest 190,612.50
Mangroves 8,121.25
Logged forests 1,085,216.25
Intact natural forest on peat 7,500.75
Logged forest on peat 23,190.25
total 1,314,641.00
THINKING beyond the canopy

14. What shade of green?
•Bridging the gap between BAU and low emission
development
•Some policy measures and market mechanisms are being
deployed to affect change
•Enabling conditions nascent and fragmentary
•Significant challenges remain with redesign of landbased
investments and creation of effective transition framework
THINKING beyond the canopy