`“Indonesia is in a sweet spot for the growth in infrastructure to be supported by green bonds-sukuk” Dinagaran Chandra, Co-Head Sustainability Services of RAM Consultancy, said at a panel session featuring leading international and regional second opinion providers and verifiers during the Technical Workshop on Green Bond in Indonesia. The event was held on 16 January 2018 at Grand Hyatt Hotel in Jakarta, and was organised by World Bank, OJK, Ministry of Finance (Indonesia) and Swiss State Secretariat for Economic Affairs (SECO).

RAM observes that Indonesia has the building blocks to create a vibrant and strong green bond-sukuk market. Green bonds are typically used to finance projects with positive environmental or climate friendly outcomes. In December 2017, Indonesia’s Financial Services Authority (OJK) launched a framework and guideline that details out the process requirements and procedures for green bond issuance in Indonesia.                                                                                            

According to the Green Finance Opportunities in ASEAN report published by DBS Bank and the United Nations Environment Programme Inquiry in November 2017, demand for additional ASEAN green investments opportunities are envisaged to come up to an estimated USD3 trillion between 2016 and 2030. This opportunity represents a new ASEAN green investment market that is 37 times the size of the global green bond market in 2016. This investment is spread across four sectors: infrastructure (US$1,800 billion), renewable energy (US$400 billion), energy efficiency (US$400 billion) and food, agriculture and land use (US$400 billion). This report also highlights that 36% of ASEAN’s infrastructure investment opportunities are in Indonesia.

Independent assessments or also known as second opinion reviews have become a mainstream practice in the global green bond market and a core expectation when issuing a green bond or sukuk. The external review process evaluates the alignment of issuer’s green bond framework against local and international guidelines for green bonds. Second opinions for green bond-sukuk provide the transparency required to support the integrity and the development of the green bond-sukuk market.

The global green bond market is an emerging asset class supported by increasing appetite for sustainable and responsible investments. “The recently introduced Indonesia’s Green Bond Regulations alongside the ASEAN Green Bond Standards are important milestones for the region in scaling up its commitments towards addressing climate change through innovative and sustainable financing such as green bond and/or sukuk for environmentally-friendly projects. These standards are expected to provide a solid foundation in building a successful pipeline of green bonds particularly in Indonesia and ASEAN at large. The World Bank Group Indonesia, the Global Knowledge & Research Hub in Malaysia and the Treasury will continue to be a close partner to ASEAN member countries in the development of green finance market in the region,” said Rodrigo A. Chaves, World Bank Country Director for Indonesia.

OJK’s new green bond guideline is an important driver of Indonesia’s Sustainable Finance Roadmap. The guideline covers green projects in renewable energy, pollution prevention and control, energy-efficiency, sustainable water management, low-carbon transport and others.

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

© Press Release 2018