(Illustrated by Randy Dwicaksana)
"Greed is Good; Green is Great": Towards Optimizing Sustainable Investment in Indonesia
BY :FABIAN BUDDY PASCOAL
JANUARY 27, 2021
.In the 1987 movie "Wall Street," the fictional Gordon Gekko said that "greed, for lack of a better word, is good." In reality, however, we must ask if greed is bad, good - or in fact both?
Greed is a prime manifestation of human kind’s individualistic mentality and selfishness. It is potentially destructive when used to chase profits by blindly disregarding moral norms. On the other hand, it can also be a constructive force. In September 1970, Milton Friedman wrote a legendary article in the New York Post entitled “The Social Responsibility Of Business Is to Increase Its Profits”. That title captures profit-making as a main foundation of business attitudes in the marketplace.
Profit motivation is the grease of our economy, creating the financial system and institutions, and crowding the market. Profits are a vital ingredient in capitalism that energize investors and give entrepreneurs the courage to take risks and seek new opportunities (Ali, 2006).
Capitalism is the school of economic thought that has – for better or worse - playedthe largest role increatingthe modern world. It is not perfect, but it is arguably the best practical - and the only possible - option that delivers results. Capitalism favours individualism, a free market, and industry competition. When James Watt designed efficient engines powered by steam in the 1760’s, capitalism began to spread across the world.
Since the Industrial Revolution it has been continually reinforced by, and grown together with, technologicaladvances. It is worth noting, however, that capitalism has been also seen as a counter to sustainability (Landis, 2020). While Indonesia has been widely influenced by capitalism, we don’t run our national development under a capitalist economic system. Indonesia owns, applies, and benefits from our own economic system - the Pancasila economic system.
The Pancasila economic system is rooted in Pancasila, our national ideology that crystalizes and expresses the main value systems of Indonesians. Out of the five principles, the social justice principle is the most relevant to the economic system. It carries two principles, being the principle of just income distribution (in a society with growing wealth) and the principle of economic democracy.
The Pancasila economic system also makes it possible for the state to play a number of governing roles without absolute domination. The Pancasila economic system is neither as constricted as that in the former USSR, nor as liberal as that in the US. It, in short, (a) provides room for freedom that is exercised in a responsible manner, and social orders that still appreciate - and even encourage - people’s initiatives, and (b) pursues a just and wealthy society on the basis of economic democracy (Salim, 2000).
In pursuing the creation of such a just and wealthy society, Indonesia carries out national development in various areas. Investments, particularly foreign investments, play very strategic roles in national development. In the present era of globalization, direct foreign investments are the engine of the world economy. They are benefitting both sides, aiding the foreign investors and their host countries. Since specialization is the essence of globalization, due to the unequal spread of resources globally, people enter into collaboration in various ways and forms. Indonesia has done this, and therefore can provide the resources and abilities needed by others nations and individuals.
Globalization, however, has also created competition at an international level. This requires Indonesia to step out, get up, and stand out of the crowd in the world-wide competition of inviting and attracting foreign investments to the nation. It simply means that Indonesia has to create, maintain and offer a desirable investment climate that comprises both an easy way of doing business and ensures certainty. It means all the red tape (being the investment obstacles) must be cut, and that Indonesia must instead throw down an investment “red carpet”.
The problem then arises of how to turn red tape into a red carpet. In light of this, the government has issued Law No. 11 of 2020 on Job Creation. The substance of the law includes creation of an investment ecosystem, business licensing matters, ease of doing business, and other initiatives that support investment attractiveness. Concerns have been raised that the law is not pro-environment. These are serious accusations that must be addressed during its implementation.
While investments play crucial strategic roles, and are therefore pursued, Indonesia has also imposed criteria in making sure that only those that benefit the country are welcomed, accommodated, and facilitated. This idea embraces the concept of sustainable development under the 2030 Agenda for Sustainable Development launched by United Nations in 2015. The agenda’s aim is to end poverty and set the world on a path of peace, prosperity and opportunity for all on a healthy planet. It provides 17 Sustainable Development Goals (SDGs). Goal #8 particularly concerns sustainable economic growth.
In accordance with the SDGs, the Indonesian government enacted Presidential Decree No. 59 of 2017concerning Implementation of Achievement of SDGs. The SDGs have also been mainstreamed into Indonesian’s National MediumTerm Development Plan of 2020-2024 under Presidential Decree No. 18 of 2020.
The Sustainable Development Goals Report 2020 issued by the United Nations highlights the deep and vast impact of Covid-19 on the world. One of the priceless lessons learned from the Covid-19 pandemic is that the recovery from the crisis must be carried out with a greener economy. Such economic practices will, besides bringing health and wellness to the public, help to better foster and accelerate the overall development of the social economy of the people. It seems greed maybe good, but ultimately it is green that is great.
Fabian Buddy Pascoal is a doctoral program student of the University of Indonesia's School of Environmental Studies and a partner at Dentons HPRP Law Firm.
The views expressed in this article are those of the author.