Presentation by Ahmad Rifqi, OJK - OECD Focus Group Discussion: Developing a green finance facility to catalyse private investment, 27 October 2020

1. Sustainable Financing
Support for Clean Energy
and Investment
Financial Services Authority - Indonesia
This document is prepared for FGD CEFIM – OECD with other ministries on 27th Oct 2020

2. Table of
Contents
Achievements Sustainable Finance (SF)
Roadmap Phase I (2015 – 2019) and
Developing Phase II (2020 – 2024)
Sustainable Finance Product
Challenges in RE & What Next
Appendix

3.  The Roadmap focuses on increasing the financial
services institutions awareness of the importance
of sustainable finance in supporting businesses and
in building a basis for effective regulations
 Intended to assist FIs to strengthen their resilience and
competitiveness, especially in financing or investment
for sustainable project
 The Roadmap provides comprehensive and
accommodative regulatory frameworks and
guidelines; became the basis for participation in FIs,
including Bank, Capital Market and Non-Bank
Institution in supporting Indonesia's commitment to
SDGs and climate change (a low carbon economy)
Sustainable
Finance
Roadmap
Phase I
(2015 – 2019)

4. Achievements
of Roadmap
Phase I
(2015 – 2019)
COLLABORATION04
POLICIES
REGULATION
AWARENESS03
02
01
Institutional Collaboration (Ministries/Institutions, Universities, and
Research Institutions) Ministries/Institutions (K/L): Ministry of National
Development Planning, Ministry of Finance, Ministry of Environment and
Forestry, Ministry of Agriculture, Ministry of Energy and Mineral Resources,
Ministry of Industry, Ministry of Economic Affairs, Ministry of Maritime
Affairs and Investment, Ministry of Social Affairs, Ministry of
Transportation, BIG, BNPB.
Other Institutions: IFC, USAID, GIZ, UNDP, WWF Indonesia, IDH, UNESCAP,
UNIDO, GBCI Universities/Research Institutions: Gadjah Mada University,
Padjajaran University, Indonesia University, IPB University, Trisakti
University, Udayana University.
.
1.Capacity building – Sustainable Finance Training (internal and
external); 53 batches (basic, intermediate and TOT levels);
2.Guide-Book for Sustainable credit/financing in the Plantation
Sector and Oil Palm Industry, Clean Energy, Energy Efficiency, Green
Building and Organic Agriculture under the sharia scheme.
1.POJK Number 51 /POJK.03 / 2017 Sustainable Finance
2.POJK Number 60 /POJK.04 / 2017 Green Bond
3.KDK Number 24 / KDK.01 / 2018 regarding 25% Cost-reduction
Incentive on registration fee & GB registration statement
4.Technical Guidelines for Banks for the Implementation of POJK
51 (voluntary)
1. Implementation of the 8 Principles of Sustainable Finance;
2. Action Plan for Sustainable Finance (or RAKB);
3. Allocation of Social and Environmental Responsibility Fund (TJSL);
and
4. Sustainability report.

5. Sustainable
Finance
Roadmap
Phase II
(2020 – 2024)
SF Roadmap Phase II will focus on building the Sustainable Finance Ecosystem;
strengthening the implementation of ESG risks, as well as boosting innovation and
developing financial services and products, support the achievement of Sustainable
Development Goals (SDGs) and Paris Agreement.

6. Increasing the share of renewable energy in Indonesia would not only contribute to the reduction of green
house gas emission, but also for GDP, creation of new jobs, an increase in trade balance, welfare of the
people, and other positive social and environmental impacts.
(Source: ADB, 2019)
Investment needs in emerging countries between 2016 and 2030 stand at USD23T, where the renewable
energy sector requires USD1.76T.
(Source: IFC, 2016)
To reach the 2025 energy target, USD36.95 billion of investment is needed over a period of 2020-2025.
a. USD17.45B : geothermal energy
b. USD14.58B: micro-hydro
c. USD1.69B: solar
d. USD1.37B: bioenergy
(Source: EBTKE KESDM, 2019)
Financing/Investment Need in the Renewable Energy Sector

7. Sustainable Finance Product
CAPITAL MARKET
NON-BANK FINANCIAL
INSTITUTIONS
 IPO (sustainability bond,
green bond/sukuk, etc)
 For infrastructure financing
(bonds and sukuk, RDPT,
KIK EBA, asset-backed
securities /participation
letters, DIRE, DINFRA);
 Equity Crowdfunding
 Pension Fund: Sustainability
bond – pension fund, green
investment.
 Financing Institution: financing
to environtment friendly MSMEs.
 Microfinance: financing for
organic farmers.
 Insurance: insurance for
fishermen/farmers, climate risk
insurance, etc.
BANKING
 Sustainability Bond
 Green Loan/Financing:
syndicated loan or
innovational financing that
uses Green Climate Fund
such as green building,
ecotourism, renewable
energy, efficiency energy,
organic farming, sustainable
infrastructure.

8. Portofolio of Sustainable Finance
9.510.214
10.153.067
10.667.511
8.800.000
9.000.000
9.200.000
9.400.000
9.600.000
9.800.000
10.000.000
10.200.000
10.400.000
10.600.000
10.800.000
2016 2017 2018
Renewable Energy
6.241.108
8.108.071
8.582.848
-
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
7.000.000
8.000.000
9.000.000
10.000.000
2016 2017 2018
Efficiency Energy
1.207.667
1.418.462
1.509.923
-
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
1.600.000
2016 2017 2018
Recycling Industry
78.835.289
90.966.974
108.575.639
-
20.000.000
40.000.000
60.000.000
80.000.000
100.000.000
120.000.000
2016 2017 2018
Sustainable Agriculture
1.063.297
1.157.427
1.231.899
950.000
1.000.000
1.050.000
1.100.000
1.150.000
1.200.000
1.250.000
2016 2017 2018
Sustainable fisheries
1.926.303
2.101.905
2.219.952
1.750.000
1.800.000
1.850.000
1.900.000
1.950.000
2.000.000
2.050.000
2.100.000
2.150.000
2.200.000
2.250.000
2016 2017 2018
Sustainable Forestry
11.000
13.000
16.000
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
2016 2017 2018
Eco Tourism
2.000.355
3.668.815
3.955.701
-
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
2016 2017 2018
Green Building
1.746.988
413.349 488.417
-
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
1.600.000
1.800.000
2.000.000
2016 2017 2018
Green Infrastructure

9. Supply VS Demand
1. Indonesia energy consumption grows very
fast, the fastest among other sectors.
2. The Sustainability of RE power supply
3. The Capacity of PLN’s Grid (Electricity
consumption)
4. Implementation cost for energy projects is
too high (eg. technology, systems)
Challenges
in
Renewable
Energy
Financing
1. RE is unfamiliar to financiers due to lack of
information
2. RE is often considered as not attractive due to
its high risk
3. Financing is hardly available for projects and
customers due to lack of funds and/or lack of
instruments.
4. Limited green financing for corporate sourcing
of renewables

10. Alternative for
Financing
Scheme
InvestorContibutionProduct
Filantropi and
Impact/Climate Funds
Filantropi,
Impact/Climate Funds
& Development Bank
Commercial Banks &
Institutional Investor
Institutional Investor
& Developer
Equity, Equity-Linked
Investment
Equity Funding
Grant (Project preparation,
Technical Assistance,
Research)
Development Facilities De-risking
Concessional Loan, First-
Loss Facility, Interest
Subsidy, VGF etc.
Financing Facilities
Senior Loan,
Subordinated Loan
SDG Indonesia One
(Managed by PT SMI)
Contribution:
Grant, Technical Assistance
Contribution:
Loan, Grants
Contribution:
Loan, Bond, Sukuk
Contribution:
Equity
SDGs
Objectives:
Pre-construction project
development support
Objectives:
Project risk Transfer
(Increase access to
banking)
Objectives:
Construction Financing/
post-construction
Objective:
Large scale of investment

11. Whats
Next?
• Supporting incentives from the government are needed
to make the energy transition towards clean energy
become a national program
• Needs for a standard market price for basic electricity
tariff that is suit for businesses so that FIs can reflect
the return on investment
• Monitoring and transparency for projects that are in
financing process to help FIs to look for data
• Innovative Financing Scheme: Create Funding that can
attract investors/corporates
• Enhance FIs Capability: capacity building for FI’s staff

12. Contact Us
+62 21 2960 0000
OJK Contact 157
humas@ojk.go.id
www.ojk.go.id/sustainable-finance

13. Incentives To
Support
Programs Of
Battery- Based
Electric Motor
Vehicles (KBL
BB)
1. Providing funds to debtors to purchase battery electric
vehicles and or developing the upstream industry from
battery electric vehicle (battery industry, industry
charging station, and component industry) could be
categorized as compliance with the provisions of the
implementation of sustainable finance.
2. Providing funds for the production of battery electric
vehicles along with the infrastructures could be
categorized as a government program that gets an
exception of the Maximum Credit Limit (BMPK) if
guaranteed by guarantee financial institutions/state-
owned or regional-owned insurance companies.
3. Credit quality assessment for the purchase of battery
electric vehicles and or upstream industrial development
from battery electric vehicles with a ceiling of up to IDR
5,000,000,000.00 could only be based on payment
accuracy of principal and or interest.
4. Credit for the purchase of battery electric vehicles and or
upstream industrial development from battery electric
vehicles to individuals or small-micro business entities
could subject to a risk weight of 75% in the calculation of
Risk-Weighted Assets (RWA).
……… effective from Oct 1 th 2020……
Related incentives in line with
OJK Regulation Number
51/POJK.03/2017 concerning
the Implementation of
Sustainable Finance for
Financial Institutions, Issuers,
and Public companies, which
describes FIs, Issuers, and
Public Companies that
implement sustainable finance
effectively could be given some
incentives from OJK, such as to
be included in capacity building
programs or be
involved/rewarded in the
sustainable finance award

14. Indonesia Sustainable Business Activities
Indonesia’s Principles of Sustainable Finance
Eight Principles of Sustainable Finance
1
Responsible
Investment
Sustainable strategy and
business practices
2
Management of social
and environmental risks
3
Governance
4
Informative
communication5
Inclusive
6
Developing priority
leading sectors7
Coordination and
collaboration8
Sustainable Business Activities
Small Micro Medium
Enterprises