Green Economy: The Main Focus of Investment in Indonesia


The Government of Indonesia strives to bring growth and prosperity for Indonesia. However, in doing so, they recognize the importance of growth that is sustainable for Indonesia’s long-term prosperity. The concept of a green economy is something that the Government of Indonesia has continued to promote. This concept is claimed to be able to improve welfare and prevent environmental damage.

What is a Green Economy?

According to the United Nations Environment Programme, a green economy is a low carbon, resource-efficient, and socially inclusive. Growth in employment and income is driven by public and private investments into economic activities that support that notion. In other words, investments are directed towards infrastructure and assets that allow reduced carbon emissions and pollution, and resource efficiency.

A green economy involves sustainable consumption and production, as well as resource efficiency for sustainable development. Sustainable consumption and production aim to improve production processes to reduce waste generation and resource consumption. Resource efficiency aims to reduce the number of resources needed and emissions and waste generated, per unit of product or service.

The Green economy is the result of countless efforts and strategies done by the Government to have sustainable economic growth while also preventing environmental damage. The focus of developing a green economy must be in line with environmental development goals such as climate change, controlling damage to biodiversity and environmental pollution, as well as the use of new and renewable energy.

Developing a green economy is often in line with the discussion of green investment. Green Investment is an investment activity that focuses on companies or investment prospects that are committed to natural resource conservation, production and discovery of alternative sources of new and renewable energy (EBT), implementation of clean water and air projects, as well as investment activities that are friendly to the environment

Green Investment and Green Energy in Indonesia

Efforts to improve the economic conditions in Indonesia are met with the perfect solution, a green economy. Green energy, a concept that came from the green economy, has now become the main focus of investment in Indonesia. This is because Indonesia has an abundance of natural resources (SDA) in the energy sector. Indonesia has the largest nickel reserve in the world, which is followed by cobalt, lithium, and manganese.

Green energy can be defined as renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. The key is that green energy doesn’t harm the environment as it doesn’t release greenhouse gas emissions into the atmosphere. The fact that it is environmentally friendly combined with Indonesia’s abundant natural resources makes green energy the perfect sector for investment in Indonesia.

The natural resources mentioned above will be used to produce electric vehicles in Indonesia. The electric vehicle battery cell factory will be the first built in Southeast Asia and is the result of the Indonesian Government’s collaboration with the Hyundai Motor Group and LG Energy Solutions. The factory’s production capacity will reach 10 gigawatts per hour. It is targeted to start operating by the year 2023.

President Joko Widodo has revealed that Indonesia will build a green industrial area in North Kalimantan. This green industrial area will be the largest in the world and will utilize green energy to drive industry. Not only will it utilize green energy, but the industry in it will also produce new and renewable energy. The green industrial area will rely on hydropower, which will be built by PT Kayan Hydro Energy by taking advantage of the flow of the Kayan River that stretches across the province. It is hoped that this project will further help Indonesia’s transition from relying on fossil fuel to using more new and renewable energy.

Thus are a few of the many efforts done by the Indonesian Government to have a green economy in Indonesia. The efforts include focusing on green investment and the development of green energy. Investors that are willing to invest in this sector will receive many benefits, starting with an easy licensing system as well as fiscal incentives from the Indonesian Government.