Lack Of Incentives, Application Of Green Financial Instruments Still Low Enthusiasts

OJK. (Photo: Doc. Antara)

JAKARTA - The steps of the Financial Services Authority (OJK) in developing green and sustainable financial instruments are not without challenges. One of them is the issue of incentives in the issuance of green sector financing.

According to the Deputy Commissioner for Financial System Stability OJK Agus Edy Siregar, there are several challenges in issuing a green instrument, such as the lack of incentives to issue green bonds or financing in the green sector. This happens because there is a need for additional procedures to verify or determine that this one sector is a green sector or not.

"Moreover, the additional costs are good for the verifier and so on, but it turns out that the price of green bonds in the market is the same as non-green bonds, so this is the biggest challenge," Agus said in the G20 Indonesia Presidency Agenda quoted by Antara, Friday, February 18.

Therefore, Agus said that a good design is needed so that there will be more interest in issuing green instruments or green financing in the future.

In addition, in the past, it turned out that there were no standards regarding green and non-green sectors, even though these standards are important so that all sectors have the same language in designing their financing.

"In the past, sustainable finance or a green economy was still in the early stages of development," he said.

However, he assesses that currently the development of green financial instruments has started well, even the G20 forum has raised the issue of the green economy as a major issue that is being discussed globally.

"This development (green and sustainable financial instruments) has started well and until now in the G20 the issue of the green economy has become a big issue that is being discussed globally," he said.

Agus said that several sustainable finance had been launched, such as green bonds of around Rp. 32.1 trillion, sustainable financing or loans of around US$55.9 billion or Rp. 809 trillion, and blended finance reaching US$3.27 billion for 55 projects.

"But it's still on record that it was data before we adjusted the Green Taxonomy which was just launched," he said.