Sri Mulyani: Financing Innovation is the Key to Environmentally Friendly Development

Illustration (Photo: Doc. Antara)

JAKARTA - The Minister of Finance (Menkeu) Sri Mulyani revealed that financing innovation is an important key to realizing sustainable and environmentally friendly development. According to him, various fiscal policies including tax incentives also act as catalytic instruments to encourage the attractiveness of green investment in the field of energy efficiency.

"Through fiscal incentives and innovative financing instruments, we have the power to pave the way for sustainable change," she said at the Energy Efficient Mortgage (EEM) Seminar on Development Throughout ASEAN Countries as reported on the official website today, Wednesday, August 23.

The Minister of Finance explained that the Indonesian government continues to utilize the State Budget to support various projects related to climate change issues. She said a number of efforts had been made, including through Climate Budget Tagging (CBT) and the launch of green sukuk, green bonds, blue bonds, and SDG bonds.

"We are also issuing a number of fiscal incentives to attract private investment in green projects and industries. These include tax holidays, tax allowances, as well as various facilities in VAT, import taxes, and property taxes," she said.

However, continued the Minister of Finance, more effort is needed towards environmentally friendly development with the challenges that are currently developing.

"Financial barriers, marked by high up-front costs and limited access to capital, overshadow the road to building sustainable buildings and infrastructure with energy efficiency principles," she stressed.

Furthermore, the Minister of Finance said that based on IFC data, the Asia Pacific region requires an investment of USD 17.8 trillion. While in Indonesia alone it is estimated that USD 200 billion is needed for investment needs in making environmentally friendly buildings.

"In other words, the government must leverage various financing options to support eco-friendly building projects in Indonesia. This is a challenge that requires innovative solutions and collaborative efforts not only for Indonesia but also for all ASEAN member countries," she explained.

At the end of her speech, the Minister of Finance reiterated that steps towards energy efficiency cannot be taken alone.

"Collaboration and synergy between government, financial institutions, industry, and society are needed to work together to create a future where energy efficiency is the foundation of sustainable development in the ASEAN region," she concluded.