Reduce Regional Tourism, Bank Indonesia Encourages Investment Outside Java

JAKARTA - Bank Indonesia encourages investors to make sustainable investments outside Java, especially on the island of Sumatra as an effort to reduce regional disparities.

"Supported by increasing infrastructure, increasing government spending and incentives, regions outside Java can outperform in terms of investment and broad economic growth," said Deputy Governor of Bank Indonesia Dody Budi Waluyo when giving an online speech at the Lampung Investment Business Collaboration Forum, quoted by Antara, Tuesday, September 20.

Dody said that Sumatra is a potential location to invest because it stores a wealth of natural resources in the form of oil, silver and gold, then the main producer of tea, coffee, rice and corn. In addition, Sumatra which has an area almost the size of California also produces a quarter of the country's GDP.

Bank Indonesia assesses that sustainable investment needs to be strengthened both in terms of policy framework and implementation. The success of the transition to a more sustainable global economy, said Dody, is highly dependent on sustainable funding.

"For this reason, all means to strengthen sustainable investment need to be done quickly and together, including through various discussions which ultimately lead to consensus even at the national and global levels," he said.

Although the sustainable development strategy or Sustainable Development Goals (SDGs) is still in its early stages, he continued, investment in the field of SDGs is very important for investors.

"Not only for reasons related to climate risk policies but also for their reputation and leadership (investors) in encouraging future sustainability agendas," he said.

Meanwhile, Bank Indonesia already has three strategies to improve sustainable financial instruments. First, developing green financial instruments and investment to encourage sustainable and inclusive economic growth as a source of new growth as well as expanding labor and supporting the Paris Agreement.

Second, the importance of developing a sustainable financial instrument ecosystem. This can be realized with the support of all relevant parties, through incentive policies, and disinfective, as well as building resilience infrastructure," he said.

All important elements such as green taxonomy, verification services, green certification, green certification institutions as well as green rating agencies, are also part of the sustainable financial instrument ecosystem.

Then the third strategy is a sustainable program of capacity building and technical assistance, which is important to improve the understanding and expertise of all parties. From a macroprudential perspective, Bank Indonesia supports green transformation, through lower down payment for electric vehicles and special loans for value or green property.