Indonesia Needs less Energy Subsidies, more Green Infrastructure Investment
Indonesian vice president Boediono stated at the opening of the two-day Green Infrastructure Summit in Jakarta (29/04) that Indonesia's heavily subsidized energy prices might be the key reason why the country has failed to make its development policy more environment friendly. According to Boediono, a national consensus - involving the central and regional governments, businesses, lawmakers and other stakeholders - is needed to systematically curb Indonesia's large energy subsidies.
The government allocated IDR 300 trillion (USD $26.3 billion) for energy subsidies in 2013 (mostly on fuels and electricity) and is expected to spend at least IDR 282 trillion (USD $24.7 billion) this year. Most analysts, however, would like to see these funds spent on more productive matters such as infrastructure development or healthcare and education. Boediono did acknowledge that reducing the subsidies is complex and implies social and political risks. Therefore, he would support a more gradual yet systematic curbing of the country's energy subsidies.
Regarding development of (green) infrastructure projects, Boediono said that due to limited financial means the government needs participation of the private sector. In that context, he would like to see better cohesion between industrial and economic policy.
Meanwhile Chairman of the Indonesian Chamber of Commerce (Kadin Indonesia) Suryo Bambang Sulisto said that for Indonesian businesses to be green, it means more than just consuming less energy. Industrial practices also need to be sustainable and acknowledge ecological limits as exceeding these limits will only jeopardize the health and prosperity of future generations in Indonesia.
Kadin Indonesia official Shinta Kamdani added that "even though costs are high, there will be some returns from the efficiency aspect. It is important that our future leaders are support green infrastructure."
Kadin Indonesia is currently drafting a roadmap for green infrastructure development, while the Indonesian government is planning to introduce a green rating system for infrastructure projects. Longevity will be one of the main criteria of this new system.