In December 2017, Indonesia’s Financial Services Authority (OJK) launched the framework and guidelines that lay out the requirements and procedures for issuing Green Bonds-sukuk in the country. (Sukuk or Islamic bonds generate returns to investors without infringing Islamic law, which prohibits interest.)

OJK's Green Bonds guidelines are an important driver of Indonesia’s Sustainable Finance Roadmap covering green projects in renewable energy, pollution prevention and control, energy-efficiency, sustainable water management and low-carbon transport among others.

The National Development and Planning Ministry (PPN/Bappenas) is looking to use Green Bonds-sukuk to finance the government's million homes initiative. Eko Putro Adijayanto, CEO of Non Government Investment Financing (PINA) supports the idea saying there are foreign investors from China ready to do just that to the tune of USD 100 million. 

Eko Putro noted that PPN/Bappenas is currently preparing affordable housing for civil servants, the police force and the military that are being financed through Green Bonds.

Globally, the Green Bond market is growing rapidly and the fastest area of growth is in the ASEAN region. CNBC report that China is the world's largest issuer of Green Bonds and according to RAM and the Green Finance Opportunities in ASEAN report published by DBS Bank and the United Nations Environment Programme Inquiry in November 2017, demand for additional ASEAN green investments opportunities are expected to reach an estimated USD 3 trillion between 2016 and 2030.

This reflects a new ASEAN green investment market that was already 37 times the size of the global Green Bond market in 2016. The report also notes that 36% of ASEAN’s entire infrastructure investment opportunities are in Indonesia. 

Sources: Detik, Financial Times, The Jakarta Post, RAM Consultancy, CNN, Bappenas, CNBC

This article was previously published on Gapura Bali

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