The country of Southeast Asia has already raised nearly $ 12 billion in thematic obligations, including blue bonds and Islamic investment instruments over the past seven years.
These efforts were supported by development partners, including the United Nations.
Putut Hari Satyaka, is the Deputy Minister of Financing and Investment of Development at the Indonesian Ministry of National Development Planning (Bappenas). He spoke to the UN News before a UN key Conference on development of development which begins in Seville on June 30.
UN News: How much money is necessary in Indonesia to reach the SDGs and what is your estimated financing gap?
Putut Hari Satyaka: The existence of an ODD financing lake remains an important challenge, especially for developing countries. Indonesia is no exception. The financing gap to fully achieve the 17 objectives and their objectives remains significant. With approximately $ 4.2 billions of dollars necessary for Indonesia to reach the SDGs, there is a funding gap of 1.7 billion of dollars which has not yet been resolved.
Putut Hari Satyaka, Deputy Minister for Financing and Development Investments at the Indonesian Ministry of National Development Planning (Bappenas).
UN News: How to reduce this gap?
Putut Hari Satyaka: We need an integrated and transformative approach, going beyond “business as usual”. For us, it means two things.
First, we must improve the use of public finances to be more effective, resistant and transparent. This includes improving budget alignment on the objectives of SDGs, strengthening the efficiency of expenditure and the guarantee that resources are effectively priority and used for sectors generating transformative discharge effects for sustainable development.
Second, we must be creative and innovative – which means that we must develop existing innovative funding methods and explore new ones. Some of the most important instruments and approaches are mixed finance, thematic obligations and denominational financing.
Indonesia has made great progress in this regard. We have created an ecosystem of a wide range of innovative instruments, attracting a diverse range of stakeholders and entities, to support the necessary regulations and to develop the empowering environment to maintain the market.
UN News: What is the denominational funding and what has been experienced by Indonesia so far?
Putut Hari Satyaka: Confessional financing, in particular in the Indonesian context, refers to financial practices based on religious principles, in particular, in the principles of Sharia law in Islam.
The families of Ache, in Indonesia, received subsidies in denominational cash to make improvements to their home.
As Indonesia has 241.5 million Muslims, 85% of the population and confessional social funding as zakat And waqf have been a longtime practice, deeply rooted in our society.
What is new is the allowance of these instruments towards the SDGs. Indonesia has made solid progress in the progress of Sharia law as part of its inclusive growth program.
Sharia law now increases by 14% per year, exceeding conventional finances. We also defend the scale, green sukukwhich is an obligation in accordance with Sharia law specifically issued to finance environmentally friendly projects.
This reflects the strong commitment of Indonesia to build a competitive financial ecosystem for denominational instruments, and we will continue to strengthen collaboration, stimulate innovation and guarantee that denominational funding plays a central role in our economic development.
UN news: are you able to raise new funding thanks to these denominational instruments? Critics sometimes say it’s just another way to reach the same funds you might get otherwise.
Putut Hari Satyaka: Yes, we are. With the largest Muslim population in the world, there is a massive potential in the pipeline of denominational financing to the SDGs.
In 2018, Indonesia published the first sovereign green in the world sukukRising $ 1.25 billion to finance renewable energy and climate adaptation projects.
Between 2019 and 2023, the government has collected around $ 1.4 billion through interior retail sales Green sukukEngage individual investors in climate financing. This demonstrates the high potential of green sukukboth at the national and international level.
The 17 sustainable development objectives provide the plan for a more equitable world.
We also see great potential in Islamic social funding. Indonesia zakat The potential is estimated between $ 18 and 25 billion dollars a year. The actual collection remains less than 5% of this potential, there is therefore clearly a large opportunity to strengthen social finance.
UN News: What lessons have you learned over the years and what advice do you have for national or offense governments interested in denominational funding?
Putut Hari Satyaka: Although we have made great progress in denominational funding, we have a lot of room for improvement, improvement and even exploration. Here are some potential lessons:
First and foremost, awareness is the key. As many consider denominational funding as well as community financing, the participation of society in these instruments begins with their understanding of their importance and how money will be used.
Second, we see that the close coordination and the concerted actions of the relevant stakeholders are crucial. The overlaps are inevitable without appropriate coordination. This is coordination – including with nourishment governments, where we see the room for improvement in order to broaden the denominational funding in Indonesia.
Finally, strengthening confidence takes time. Confessional financing is strongly based on public confidence, both in institutions that manage funds and in the way funds are used.
Like many other financing instruments, we have learned that transparency, responsibility and coherent communication are essential to win and maintain this confidence.
Publicado anteriormente en Almouwatin.
