G-20 News

Encouraging sustainable investments across the G20

Jakarta (ANTARA) – The Indonesian presidency of the G20 seems to present the right opportunity to massively promote the trend of sustainable development; a subject that had been talked about in recent years and pushed in several sectors, including investment.

Apart from its contribution to environmental sustainability, sustainable investing also plays a vital role in global economic recovery, especially in the post-COVID-19 pandemic period, as it enables an ideal situation for the whole world.

Sustainable investment in a small business would encourage the use of resources from surrounding areas, empower local people and preserve the environment.

It also serves as a means of making global investment more sustainable, enabling it to withstand future challenges.

In 2022, sustainable investing has been widely promoted within the G20.

Investment Minister Bahlil Lahadalia called for making the most of the opportunity presented during Indonesia’s G20 Presidency to call for efforts to support economic transformation.

At the G20, Indonesia raises three issues: global health architecture, digital-based economic transformation, and energy transition, which is closely linked to sustainability issues.

Indonesia is focused on using the G20 as a platform to encourage inclusive and sustainable investment, he noted.

He also noted that Indonesia, through the Trade, Investment and Industry Working Group (TIIWG), would focus on promoting investment opportunities that would support the vision of economic transformation. .

They champion the concepts of green energy, green industry and blue economy to implement sustainable investments, he noted.

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Extension of the invitation to a project

So what can government do to advance the sustainable investing agenda?

The government, through the Ministry of Investment, offers up to 47 sustainable investment projects valued at Rs 115.120 billion, placed in certain sectors, such as tourism, economic zones, industries and infrastructure.

The projects were spread across 33 provinces, including nine in Java, 11 in Sumatra, six in Kalimantan, nine in Sulawesi, three in Bali and Nusa Tenggara, and nine in Maluku and Papua.

A pre-feasibility study has been conducted for the projects, and they will be proposed at the G20.

Indonesia will use its privileges, given the G20 presidency, to work with other members to implement synergistic policies and economic recovery programs in sectors such as trade, investment and industry. , in order to achieve the Sustainable Development Goals.

The TIIWG cited sustainable investing as one of the priority issues they were discussing.

The Investment Planning Assistant at the Ministry of Investment said he expects Indonesia to participate in achieving the Sustainable Development Goals, which are to be achieved by 2030.

No attractive value yet

Although it has a positive impact on the environment, social aspects and management, it turns out that investors still haven’t paid much attention to sustainable investing. It was not yet considered interesting, economically.

Bank Mandiri’s chief economist, Andry Asmoro, cited unattractive returns as one of the challenges in developing sustainable investment in Indonesia.

“Thus, sustainable projects, whether environmental or social, are still relatively limited because they are considered less profitable. This is the general assumption when we talk about short term (benefits),” he said. -he declares.

Economic factors cannot be denied as the main aspect for investors to invest their capital. So, it is very natural for investors to see what return they can get once they look into a project. The reward would allow investors to form an opinion and measure the attractiveness of sustainable investments compared to conventional investments.

However, it’s not just about performance. Investors also consider other aspects, such as the special financing structure required for a sustainable investment.

“If we look at sustainable projects, whether they are related to environmental projects, it requires new technology, significant capital and long-term financing, for which a special financing structure is required compared to conventional structures. C This may prove to be a challenge in the short term,” he added.

On the other hand, government support in the form of incentives is necessary in sustainable investing because it involves risks, ranging from natural factors to legal certainty linked to bureaucratic problems.

The last challenge is the identification of assets that would require a good information system. In Indonesia, the asset information system for managing sustainable investments is still very limited, so it becomes difficult to develop sustainable investments.

The Indonesian G20 Presidency should not only echo sustainable investment or other sustainable trends, but also accelerate its implementation, so that its effects are tangible for all. Likewise, proposed investment projects should be implemented, so that the Indonesian people can immediately benefit from them.

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