Economists Project PDB Potential From Green Economy Reaches IDR 3,000 Trillion

Center of Economics and Law Studies (Celios) economist Bhima Yudhistira (right). (Photo: Theresia Agatha/VOI)

JAKARTA - Economist and Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira projects that there will be state revenues of up to IDR 3,000 trillion if Indonesia makes a transition from an extractive economy to an economy that is more environmentally friendly or greener.

"If there is a political commitment, more serious support from banks, financing institutions, fiscals, and from the monetary side of policy supports that direction, there will be more massive gross domestic product (GDP) created, almost Rp. 3,000 trillion in the next 10 years," said Bhima in the Green Economy Transition Fate agenda in the Political Year held by Greenpeace Indonesia in Jakarta, Tuesday, December 19.

Bhima said that the figure is almost double compared to the government continuing to run an extractive economy. The economy includes oil and gas (oil and gas), nickel, and coal.

"If the economy is like this, the GDP is only IDR 1,843 trillion. If it moves to a green economy, there is IDR 3,000 trillion in economic potential," he said.

He added that his party together with Greenpeace Indonesia had used the input-output model to see the impact of multiples on direct investment input in calculating the economic potential for GDP.

On the other hand, Bhima assessed, there is a need for funding from the government and the private sector which is able to encourage business actors to switch to the sustainable industrial sector.

This is done so that the transition to a green economy can run well.

"The government can divert fiscal incentives in the fossil fuel and mining sector to the sustainable industrial sector, apply coal production tax and windfall profit taxes, and manage endowment funds originating from natural resource (SDA) revenues," he said.

Bhima said, the private sector can also play a role in green economic funding.

Banking service actors can transfer the portion of bank credit in the mining, quarrying and oil and gas sectors to the sustainable industrial sector.

"Meanwhile, companies in the capital market can also optimize public funds in the capital market to encourage green economy financing through initial public offering (IPO)," he added.