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On December 5th, the Indonesian Financial Services Authority (OJK) and the Ministry of Environment and Forestry (KLHK) launched a "Roadmap for Sustainable Finance in Indonesia". The goal of the Roadmap is to determine which measures need to be taken to improve the sustainability of finance in Indonesia, and to have these implemented by 2024. It contains a detailed work plan for the period of 2015-2019, which will apply to all institutions that fall under the authority of the OJK, namely the banking, the capital market and the Non Bank Financial Services Industry (IKNB) sectors. The Roadmap is part of the Master Plan for Indonesia's Financial Service Sector (MPSJKI) which is due to be published by the end of 2015.
The activities set forth in the work plan are divided in 3 focus areas:
1. Increase the supply of sustainable financing:
Regulatory support and incentives (both fiscal and non-fiscal) should encourage innovations in developing environmentally friendly products and investments in priority sectors. This will include instruments like targeted loans and guarantee schemes, green lending models, green bonds, a green index and a special focus on supporting the national energy security plan.
2. Increase the demand for sustainable financing products:
Targeted outreach campaigns and socialization programs should make the market more aware of the importance of risk management and mitigation and of the financing potential for environmentally friendly projects.
3. Increase the oversight and coordination of sustainable finance implementation:
Financial institutions will be required to adopt risk management policies governing the social and environmental aspects of their activities, they will have to observe the balance of the 4Ps (pro-growth, pro-jobs, pro-poor and pro-environment) in all their activities and they will have to publish an annual sustainability report.
The implementation of the Roadmap will be a joint effort of the OJK, together with at least 7 ministries, the Indonesia Stock Exchange and Law Enforcement Agencies. To facilitate the coordination and the exchange of information, a Forum on Sustainable Finance will be organized at least twice a year, with all relevant stakeholders.