Indonesia's economic fundamentals remain stronger compared to other nations. This is evidenced by economic growth that has consistently exceeded 5% for seven consecutive quarters and controlled inflation at 3.17% in August 2023. These strong fundamentals serve as Indonesia's foundation to drive the green economy as a new source of sustainable economic growth in the future as stated by Coordinating Minister for Economic Affairs. Indonesia has increased its commitment under the Nationally Determined Contribution (NDC), raising the emission reduction target from 29% to 31.89% by domestic efforts and from 41% to 43.20% with international assistance by 2030. This enhanced NDC aligns with the Long-Term Low Carbon and Climate Resilience Strategy 2050 and the vision to achieve net zero emissions by 2060. Achieving this vision requires strong collaboration among various stakeholders and increased access to financial and technological solutions. Therefore, Indonesia is strengthening collaboration with the private sector and promoting creative and innovative financing by establishing the Sovereign Wealth Fund - INA, the Environmental Fund Management Agency (BPDLH), and SDG Indonesia One to attract and initiate investment projects.
Indonesia has also introduced carbon pricing policies through carbon trading and carbon tax under Presidential Regulation No. 98 of 2021 on the Economic Value of Carbon. Furthermore, Indonesia has introduced demand-side incentives to accelerate the adoption of new and renewable energy and environmentally friendly sectors. These include the Luxury Goods Sales Tax Regulation for Electric Vehicles to boost electric vehicle demand, Presidential Decree No. 55 of 2019 on the Acceleration of Battery-Based Electric Motor Vehicle (BEV) Programs for Road Transportation to strengthen fiscal and non-fiscal incentives, and the B35 mandatory program beneficial for saving, stabilizing palm oil commodity prices, increasing value-added, and reducing carbon emissions. Indonesia's commitment to sustainability is not limited to the national level. Regionally, agreements were reached to establish the Electric Vehicle Ecosystem and develop ASEAN Carbon Neutrality.
