Ministry of Finance: More Efforts are Needed to Support Green Transition in the Financial Sector

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA – Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance (Kemenkeu) Febrio Kacaribu stated that a green transition in the Indonesian financial sector still requires more effort to achieve the expected target.

He explained how the financial sector is expected to be able to support the fulfillment of the Nationally Determined Contribution (NDC) target and also reduce the greenhouse gas effect.

"We believe here that to achieve growth it must be in line with actions that are in line with environmental principles. Therefore, the financial sector must also support this, which we call a financial transition," he said in a series of ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM) in Jakarta, Wednesday, August 23.

In his description, Febrio revealed that the financial transition requires the industry and the products it produces to reduce carbon emissions, which then supports the achievement of environmental sustainability targets.

"During the G20 Presidency last year, Indonesia initiated the presence of a financial transition framework which became a reference in producing policies in line with environmental orientation. In Indonesia, we have released the Energy Transition Mechanism Country Platform, which is an example of how we can achieve a transition in the energy sector," he said.

To note, the transition in the financial sector has been carried out by Indonesia by issuing financing instruments that are more segmented with a green policy direction. This can be seen from the issuance of green sukuk which has reached a value of 6.2 billion US dollars.

"We also issued Sustainable Development Goals (SDG) bonds with a value of more than USD 577 million, both at home and abroad," he said.

On this occasion, Febrio also said that in the period 2021 to 2022, Indonesia had succeeded in attracting an investment commitment of USD 20.3 billion for the electric vehicle supply chain. Of that amount, the largest portion is for the production of batteries (electric vehicles) worth USD 15 billion.