Jakarta, — In a significant move to bolster Indonesia’s climate finance framework, the Ministry of Finance, in collaboration with key financial institutions and international development partners, hosted a Focus Group Discussion (FGD) at Hotel Borobudur, Jakarta, to explore strategies for advancing Climate Blended Finance (CBF). This initiative, led by the National Designated Authority (NDA) of the Green Climate Fund, seeks to mobilize both public and private sector resources to support sustainable development in Indonesia’s priority areas, including renewable energy, water management, sustainable landscapes, and food infrastructure.
Noor Syaifudin, the representative of BKF, opened the discussion, emphasizing the need for innovative financing mechanisms that extend beyond traditional state budget allocations. “Blended finance is essential for stimulating sustainable development. By combining public and private funding, we aim to enhance project bankability and meet Indonesia’s ambitious climate goals,” he stated.
Key insights presented by Lenny Hidayat, Partner of Greenwise Consulting highlighted that sectors such as renewable energy and wastewater management face bankability challenges. To address this, stakeholders agreed on forming a shared forum for learning and collaboration, potentially leading to a dedicated blended finance platform.
The FGD underscored the need for cross-sector cooperation, with organizations like PT Sarana Multi Infrastruktur (PT SMI) and the World Bank sharing their expertise in project structuring and financing. PT SMI presented their experience with the “Energy Transition Mechanism Country Platform” initiative, which promotes energy transition projects through a mix of grant and investment support from 18 global partners.
Participants raised concerns about the barriers faced by private entities, including legal uncertainties and varying environmental standards. BNI noted that private sector involvement remains cautious due to legal complexities and sustainability concerns. Meanwhile, the World Bank underscored the critical role of local governments in climate resilience, particularly in water and sanitation, as inadequate infrastructure could exacerbate methane emissions—a significant factor in climate change.
The discussion concluded with widespread support for establishing a sectoral approach to climate finance. Attendees from the UNDP, ADB, and BPDLH agreed on the importance of setting clear operational guidelines, mapping sector-specific instruments, and engaging both national and international stakeholders in future initiatives.
This FGD marks a pivotal step towards realizing Indonesia’s vision for sustainable climate financing, with the hope that a blended finance framework will soon mobilize the necessary resources to meet the country’s climate goals.
