Farming is seen in the protected areas of the Kerinci National Park (TNKS), in Kerinci, Jambi, in May. (Antara Photo/Wahdi Septiawan)
World Bank Urges Better Resource Management in Indonesia
JUNE 10, 2015
Jakarta. The World Bank has pressed Indonesia to improve resource management and governance as the country works towards more sustainable and environmentally-friendly economic growth over the next five years.
“Indonesia has enjoyed tremendous growth … but not all are benefiting from these achievements and they come with a high price of environmental degradation,” said Sri Mulyani Indrawati, managing director and chief operating officer at the World Bank, on the first day of the Indonesia Green Infrastructure Summit 2015 in Jakarta on Tuesday.
She pointed to Indonesia's forestry industry as an example of the country's murky governance track record.
"Every year, Indonesia loses some $4 billion through illegal logging. Meanwhile, revenue from forestry licensing amounts to only $300 million per year," she said. "This is a problem of governance, manifested in poor performance that impacts the implementation of existing regulations or design of better laws."
Sri Mulyani — who was a former finance minister in the Susilo Bambang Yudhoyono’s administration before resigning in 2010 — also noted “an information gap” among government agencies in Indonesia, which has led to a lack of transparency and efficiency in resource management.
“The energy sector, for example, needs more and better data on simple energy use and emissions,” she said.
Still, the World Bank managing director praised the government's moratorium on new fishing permits for large operations as an “encouraging development.”
"A well-managed 'blue' economy can ensure food security, promote sustainable tourism and build resilience. But degradation through overfishing and dumped waste exacerbates poverty and undermines food security globally,” she said.
Improving governance of the fisheries sector coupled with large-scale investment in maritime transport and trade infrastructure could double fish production in the next five years, according to Sri.
During the same summit, Vice President Jusuf Kalla admitted the government’s stance to maintaining a sustainable economic growth has been lackluster.
“We’ve always thought about environmental issues after we’re faced with problems,” Kalla said.
“We’ve learnt and we are now learning with economic principles that are sustainable so that we can pass down this country for the next generation.”
Under President Joko Widodo, the government wants to boost growth to 7 percent over the next five years, bolstered by greater investment — both by the government and the private sector — in infrastructure development.
Joko’s infrastructure vision for the country includes the development of new power plants with a total capacity of 35,000 megawatts and nine million hectares of agriculture land across the country.
In a bid to encourage more environmentally-friendly investments, Indonesia currently offers tax allowances to nine business areas relating to environmental preservation, including geothermal power, refining and natural gas processing industry, organic basic chemical industry, and clean water reservoir and purification industry.
In April, Environment and Forestry Minister Siti Nurbaya said that the ministry plans to offer more incentives — such as soft-loan facilities, business permit extensions and free import duties — to local and foreign investors with technology which reduces pollution and conserves energy.