The government expects to attract more environmentally friendly investment in the energy sector with the 35,000-megawatt (MW) expansion program currently being promoted to investors.
The expectation will be put forward at an international conference titled the “Tropical Landscape Summit: A Global Investment Opportunity”, which will facilitate the country’s transition into a green economy to ensure a sustainable future.
The summit is expected to draw around 500 top business executives from national as well as international companies on April 27 and 28 in Jakarta.
President Joko “Jokowi” Widodo is slated to officially open the event with multi-stakeholder engagement hosted by the Indonesian government in collaboration with the UN Office for REDD+ Coordination in Indonesia (UNORCID).
Investment Coordinating Board (BKPM) head Franky Sibarani said among many sectors, energy had the greatest potential to be explored for environmentally friendly, or “green”, investment.
“The government has announced its target of 35,000 MW electricity supply nationwide, which opens up more investment, including green plans,” Franky said at a press conference on Wednesday.
The Jokowi administration has laid out its plan to realize the ambitious 35,000 MW expansion project in five years as part of its efforts to boost Indonesia’s economic growth.
Franky added that green energy could support other sectors that would be essential for the economy, citing Teluk Lamong Port in Surabaya, East Java as a green port that used gas and solar power for its energy supplies.
According to Franky, the energy sector is currently growing in attraction for foreign direct investment as BKPM data reveals that between October last year and April 20 this year at least 24 new investors showed interest in investing in electricity projects.
“Of the 24 investors, three are European investors, six and seven come from Japan and China respectively and the rest from other countries,” Franky said.
During the last five years, BKPM data shows, total realized investment in the green sector stood at Rp 486 trillion (US$37.5 billion), of that 30 percent went to the energy sector.
In order to become a role model for sustainable green development, the investment board was aiming for 20 percent potential growth in green investment annually, Franky said.
Separately, Energy and Mineral Resources Minister Sudirman Said confirmed the government had prioritized green investment in the fields of renewable energy, which needs funds 10 times higher than the current Rp 1.03 trillion stated in the revised 2015 state budget.
“We will propose additional funds in the period of discussion in the 2016 state budget plan with the House of Representatives in August. We will see whether the House will respond positively,” Sudirman said.
Sudirman added that the Tropical Landscape Summit was expected to help attract more investment in the renewable energy field, which currently only stands at around 6 to 7 percent, to around 12 to 15 percent by the end of 2019, and 25 percent in 2025.
“I have to admit that currently most renewable energy projects have not been maintained well, so that we need to create market demand through better investment. We need to invite solar cell and wind turbine investors, for example,” he said.
Despite having massive reserves of geothermal energy, Indonesia faced stagnant growth in that sector, Sudirman said, adding that “we will review again who the right investors for geothermal power plants are.”