OECD - OECD Green Growth Policy Review of Indonesia 2019

Indonesias tropical and archipelagic landscape makes it one of the worlds 17 megadiverse countries. It has one of the largest tropical forests in existence, as well as extremely rich coastal and marine ecosystems. Its fertile land and its resource endowments make it one of the largest producers and exporters of minerals, energy resources, timber and agricultural products. Indonesias economic and social development since the 1997-98 Asian financial crisis has been impressive, with millions of people lifted out of poverty.

Economic success, however, has come at a high environmental cost. Deforestation and peatland burning are major sources of greenhouse gas emissions and drivers of biodiversity loss. Pollution from mining, industry and agriculture, as well as insufficient infrastructure for water supply, sewerage and solid waste management, is also putting pressure on Indonesias unique natural capital. These pressures, if unchecked, will put Indonesias economic success and the well-being of its citizens at risk.

The OECD Green Growth Policy Review: Indonesia 2019 assesses progress in addressing these challenges. It provides 49 recommendations to help Indonesia move towards greener growth, with a special emphasis on the nexus of land use, ecosystems and climate change.

Indonesia should be commended for its efforts to integrate environmental sustainability into its national development planning. This is a key step for reaping the benefits of policies fostering both socio-economic and environmental goals. The shift from coal-based electricity to renewable energy sources is a case in point. The review argues that more and better use of green taxes and cost-reflective pricing for green infrastructure and services would further support the transition to a green economy. Well-designed social policies will be key in ensuring that reforms do not harm the most vulnerable.

Indonesia has already laid the groundwork for better land management. Among other measures, it has adopted moratoriums to slow conversion of peatland to agriculture; the One Map initiative to clarify the legal status of land; and social forestry programmes to improve community access to land. The government needs to keep monitoring these programmes to ensure that they lead to more sustainable management on the ground. This will require securing sufficient financial and human resources to build capacity, align sector policies and effectively co-ordinate action across government levels.

This review is the result of a constructive dialogue between Indonesia and the countries participating in the OECD Working Party on Environmental Performance. We stand ready to support Indonesia, an OECD key partner, in the implementation of the recommendations outlined in this report. I am confident that this collaborative effort will be useful in improving our understanding of how to tackle our many shared environmental challenges and move towards greener, more sustainable growth.

Angel Gurra

OECD Secretary-General