The President of Indonesia had unveiled a three-pronged strategy to boost Indonesia’s economic growth, providing insight into the direction of government policy for the remainder of his term. The green economy, the digitalisation of micro, small, and medium-sized enterprises (MSMEs), and the development of downstream industries are the three key aspects. Regarding the first of those three, he mentioned that the government intends to construct a “green industrial park” by October 2021 to produce “green products” using only renewable energy.
We know that the future of green products looks promising, and we have a great opportunity in this.
– President of Indonesia
The government also wants all 60 million MSMEs to be able to sell their goods and services on e-commerce and other digital platforms. Elaborating on the third key point, the President stated that the government began downstream industrial development in early 2020 with a ban on one of an ore export, which increased steel exports to US$10.5 billion. The scheme would be expanded to include additional goods and services such as bauxite, gold, copper, and palm oil.
The President’s speech represents the next step in a long-term shift in economic policymaking for a government that has previously appeared to be focused on short-term gains from extractive industries with little regard for environmental consequences. As per the Finance Ministry, the main sources of revenue from export levies and non-tax income are coal, crude palm oil (CPO), and raw mineral exports.
OpenGov Asia in an article reported that in recent years, the Indonesian government has taken concrete policy steps to advance its digital transformation agenda, and while steady progress has been made in that direction, the good news is that the pace of change is expected to accelerate. To address this, Indonesia’s President has pledged to press ahead with economic reform plans, despite the heavy burden that COVID-19 has imposed on the country since the outbreak began.
In his speech, the President stated that in today’s disruptive world, the spirit to change, the spirit to make changes, and the spirit to innovate has become the foundation for building an advanced Indonesia. In this context, the president’s agenda remained focused on structural reforms designed “to promote inclusive and sustainable economic development.” Repeating the promises made at the beginning of his second term, he added that the development of “quality human capital” and infrastructure development will remain priorities, the latter a hallmark of his seven years in power.
The Indonesian leader also expressed hope that reform would help the country begin the transition to a more sustainable economy. “A significant change in our economy will be the transition to new and renewable energy, as well as the acceleration of an economy based on green technology. The President believes that using clean energy and green technology will contribute to the development of a more environmentally friendly economy. As a result, efforts will be made to strengthen national research to align with the country’s development agenda.
Meanwhile, according to the Energy and Mineral Resources Ministry, renewable energy sources accounted for 11.2% of the national energy mix in 2020, with the remainder coming from fossil fuels. As per the executive director of the Institute for Essential Services Reform (IESR), the idea of environmental economics should be accompanied by responsibilities to reduce emissions, waste, and natural resource extraction.
“The term ‘green’ must not just be a slogan; there is a lot to do to [justify] such a claim,” IESR executive director told. The concept, he said, should be incorporated into a clear transition for all industries in Indonesia, reducing reliance on natural resources and extractive industry exports. He went on to say that one industrial park is insufficient to [declare] a green economy. As a result, the entire industry must follow suit.
