esp2_3.fgd 2 green economy strategy
DESCRIPTION
Proposal FGDTRANSCRIPT
FGD 2 Green Economy Strategy
Output: 3. Implementation of Economic Instruments for Environmental Management
Prepared by:
LPM EQUATOR
Minutes of Event
Event : FGD 2 Green Economy Strategy
Output : Report F. Paper on Review of Existing Fiscal Policy of Environmental
Management in Indonesia
Date : July 28th, 2011
Budget Line : 3
Environmental Support Programme
TABLE OF CONTENTS
1. Cover (Name of Event) 2. Executive Summary 3. TOR of the Event 4. Meeting Minutes 5. Event Materials
ESP-Environmental Support Programme
Danida
EXECUTIVE SUMMARY
Event : FGD 2 Green Economy Strategy
Output : Report F. Paper on the Review Existing Fiscal Policy for
Environmental Management in Indonesia
Date : July 28th, 2011
Budget Line : 3
Background One of the critical issues that need to be addressed in
Indonesia’s economic development is how its economic progress
could be balanced with sound environmental management. The
green economy strategy is one of such a options to address this
issue. The ministry of environment along with DANIDA ESP2
project have agreed to pursue the green economy strategy as a
vehicle for sound environmental management. In this regard,
green economy strategy has been selected in Danida-KLH
Concept Notes of ESP2 Implementing Economic Instrument in
Indonesia. To identify such a strategy, series FGDs has to be
carried out to condense the right strategy for pursuing green
economy’s Indonesia. The first FGD was held and has identified
several keys challenges such as fiscal policies, scaling up
opportunities, and political sensitivity with regards to energy
subsidy. Those challenges need to be answered so that the a
comprehensive strategy could be identified. It is the intention of
this second FGD that those strategies should be discussed,
challenged and condensed for designing the concrete green
economy strategy.
Objective The objective of the second Focus Group Discussion is to
highlight some key strategies developed from previous FGD and
discuss these with relevant stakeholders. The purpose is to get
reactions, elaboration, and scrutinizing challenges and
opportunities in their implementation.
Expected Result 1. A comprehensive conceptual design of achieving green strategy in Indonesia’s economic setting
2. Systematic and comprehensive strategies of pursuing green strategy in Indonesia.
3. Comprehensive and systematic programs to support implementation of green economy in Indonesia.
Follow up the
forthcoming event
The first focus group discussion highlighted various issues, problems, and gaps in the existing initiatives to promote green economy in Indonesia. Among those gaps, the followings can be considered the keys: 1. The green economy concept has not been well-understood
especially at the grass root level 2. Green economy initiatives do exists in Indonesia, yet its
effectiveness in achieving measurable targets relative to our economy or to the damage that we have done is hardly discussed.
3. Failures in scaling-up of many good initiatives may have been attributed to the ineffective and inconsistent market regulation; risk of losing competitiveness; financial constraints; and sub-optimal coordination; and
4. Big push, macro level reform like removing energy subsidies has been constrained by social and political barriers.
In order to narrow those gaps, the following general strategies can be identified yet should be elaborated into workable policies and programs: Strategy 1: Establishing and quantifying targets of greening
the Indonesian economy at macro, micro, sectoral, and regional level.
Strategy 2: Breaking social and political barriers of abolishing energy subsidies
Strategy 3: Harmonizing policies and programs across government agencies through the revitalization or the creation of effective coordinating institutions.
Strategy 4: Promoting green investment by private financing with complementary public capital expenditure.
Strategy 5: Creating and revitalizing market regulation that is effective, consistent without reducing economic competitiveness.
Strategy 6: Revenue-neutral tax substitution to encourage favourable behaviour of economic agents toward green economy.
Strategy 7: Optimizing the inter-governmental fiscal relation to promote green economy.
Strategy 8: Strengthening the existing environmental regulatory agencies.
Strategy 9: Promoting behavioural changes toward green economy across all elements of society through systematic, structured, and long-term oriented public education.
TERMS OF REFERENCE FOR EVENT
Event : FGD 2 Green Economy Strategy
Output : Report F. Paper on the Review Existing Fiscal Policy for
Environmental Management in Indonesia
Date : July 28th, 2011
Budget Line : 3
BACKGROUND
One of the critical issues that need to be addressed in Indonesia’s economic
development is how its economic progress could be balanced with sound
environmental management. The green economy strategy is one of such a options
to address this issue. The ministry of environment along with DANIDA ESP2 project
have agreed to pursue the green economy strategy as a vehicle for sound
environmental management. In this regard, green economy strategy has been
selected in Danida-KLH Concept Notes of ESP2 Implementing Economic Instrument
in Indonesia. To identify such a strategy, series FGDs has to be carried out to
condense the right strategy for pursuing green economy’s Indonesia. The first FGD
was held and has identified several keys challenges such as fiscal policies, scaling
up opportunities, and political sensitivity with regards to energy subsidy. Those
challenges need to be answered so that the a comprehensive strategy could be
identified. It is the intention of this second FGD that those strategies should be
discussed, challenged and condensed for designing the concrete green economy
strategy.
OBJECTIVES
The objective of this second FGD, among other things are:
1. To discuss a comprehensive design of achieving green strategy for Indonesia’s economic development
2. To identify concrete strategies of achieving green economy given existing fiscal, social and political constraints
3. To provide a comprehensive and systematic programs that support green economy strategy.
OUTPUTS
4. A comprehensive conceptual design of achieving green strategy in Indonesia’s economic setting
5. Systematic and comprehensive strategies of pursuing green strategy in Indonesia.
6. Comprehensive and systematic programs to support implementation of green economy in Indonesia.
AGENDA
08:00 – 09:00 Registration
09:00 – 09:20 Opening remarks (KLH)
09:20 – 10:20 Key person presentations
Medium and long-term strategies for the promotion of green economy in Indonesia: key target indicators and how to achieve them – BAPPENAS (Deputy Minister for Natural Resources or her representative)
Existing and future fiscal initiatives to promote green economy: shortcomings and challenges – Fiscal Policy Office/BKF, Ministry of Finance (Mr. Kindy Sjahrir/BKF)
Removing social and political barriers to reforming energy pricing policies – Parliament/political party representatives (Dr. M. Ikhsan Mojo, Partai Demokrat)
10:20 – 10:30 FGD technical guidance by consultant
10:30 – 12:00 FGD (Plenary discussion)
12:00 – 12:30 Harvest by consultants
12:30 – 12:40 Closing remarks
12:40 – 14:00 Lunch
Descriptions
of the
Participants/
Invitees
Participants are expected to consist of the following:
Bappenas staffs that has been taking part in green economy initiatives at the agency.
ESDM staffs that has been taking part in green economy initiatives at the ministry.
Ministry of Trade and Industry staffs that has knowledge on their current program on promoting green economy initiatives to manufacturing sectors.
Fiscal Policy Office staffs that have knowledge in fiscal instruments to support green economy including climate change mitigation.
Local government. Relevant NGOs. Relevant experts. Relevant private sectors.
Minutes of Meeting
Event : FGD 2 Green Economy Strategy
Output : Report F. Paper on the Review Existing Fiscal Policy for
Environmental Management in Indonesia
Date : July 28th, 2011
Budget Line : 3
1. List of Participants
KEMENTERIAN/LEMBAGA PHONE/EMAIL STATUS
Kementerian Keuangan
1 Direktur Pajak Daerah dan Retribusi
Daerah, Direktorat Jenderal
Perimbangan Keuangan Daerah
087880055484/
081394555957/
Riva Setiara, Adrian K
2 Kepala Pusat Kebijakan PPRF, Badan
Kebijakan Fiskal
08158124724/
081227018596/
Mutaqin, Prima
Yudhistira
3 Kepala Pusat Kebijakan Ekonomi
Makro, Badan Kebijakan Fiskal
081380898771/
Subkhan
Bappenas
1 Direktur Perencanaan dan
Pengembangan Pendanaan
Pembangunan, Deputi Bidang
Pendanaan Pembangunan
Anna Amalia
Kementerian Lingkungan Hidup
1 Staff Asisten Deputi Ekonomi
Lingkungan, Deputi Bidang Tata
Lingkungan
021-8517161/
081315185630/
Novrizal Tahar,
Sulistianingsih S,
Isharyanto, Untung
Kementerian Kehutanan
1 Kepala Pusat Penelitian dan
Pengembangan Kebijakan dan
Perubahan Iklim
08161996976/
Fitri Nurfatriani
Kementerian ESDM
1 Direktur Aneka Energi Baru Dan
Energi Terbarukan, Direktorat
Jenderal Energi Baru, Terbarukan
dan Konservasi Energi
081320939327/
081393701860/
Andri Suhindra, Adhi
Devawijaya
2 Direktur Panas Bumi, Direktorat
Jenderal Energi baru, Terbarukan
dan Konservasi Energi
081320738905/
Dwipayana
3 Direktur Konservasi Energi,
Direktorat Jenderal Energi Baru,
Terbarukan dan Konservasi Energi
085727191119/
Safiul
4 Direktur Teknik dan Lingkungan
Ketenagalistrikan, Direktorat
Jenderal Listrik dan Pemanfaatan
Energi
081316892740/
Fauzi
Kementerian Pertanian
1 Kepala Pusat Analisis Sosial
Ekonomi dan Kebijakan Pertanian
08121110367/
Istiqlal Amien
Kemeterian Pekerjaan Umum
1 Kepala Pusat Pembinaan
Penyelenggaraan Konstruksi
08122526706/
081905606339/
Nugroho Wuritomo,
R Angga M
Kementerian Perindustrian
1 Pusat Pengkajian Industri Hijau dan
Lingkungan Hidup
087888692745/
Denny Noviansyah
Kementerian Tenaga Kerja &
Transmigrasi
1 Kepala Pusat Administrasi
Kerjasama Luar Negeri/
081904109475/
Alfania Ramdhani
2 Sekretaris Direktur Jenderal
Pembinaan Hubungan Industrial
dan Jaminan Sosial Tenaga Kerja,
Direktorat Jenderal Pembinaan
Hubungan Industrial dan Jaminan
Sosial Tenaga Kerja
Dinar Titus
3 Direktur Produktivitas dan
Kewirausahaan, Direktorat Jenderal
Pembinaan Pelatihan dan
Produktivitas
0818970014/
Kris Wahyuni
4 Kepala Balai Besar Produktivitas,
Direktorat Jenderal Pembinaan
Pelatihan dan Produktivitas
081398999678, 081380951614 Indarti, Budi Hartati
Kementerian Perhubungan
1 Direktur Lalu Lintas dan Angkutan
Jalan, Direktorat Jenderal
Perhubungan Darat
081932442014/
Desi Waluyanti
2 Direktur Bina Sistem Transportasi
Perkotaan, Direktorat Jenderal
Perhubungan Darat
085292539635/
0819870553
Fahni M, Jose Anri G
DANIDA
1 Mogens Strauup 081613040664
2 Monica
International Institute For
Sustainable Development
1 Regional Coordinator for TKN
Southeast Asia (Alexander Chandra)
0818825323/
0817790440/
Lucky Lontoh,
Alexander C. Chandra
Pertamina
1 Director of General Affairs 08121015531/
Sri Oetari S
PLN
1 Direktur Energi Primer 0811482706/
Denny Marbun
2 Direktur Bisnis dan Manajemen
Resiko
08128205553/
M Budi Setianto
IPB
1 Prof. Ir. Akhmad Fauzi, M.Sc., Ph.D
Universitas Padjadjaran
1 Dr. Suzyanna
2 Arief Anshary Yusuf, SE., M.Sc.,
Ph.D
081399399985/
Konsultan Equator
1 Ir. Rimun Wibowo, M.Si 0811117109/
2 Intan Adhi Perdana, S.Pi., M.Si 08122383855/
3 August Restiawan Soetisjno, SE.,
MM
085888160928/
4 Ir. Denny D. Indradjaja, MEP, MSIE
5 Drs. Nandang Mulyasantosa, MM
AGENDA
FGD 2 GREEN ECONOMY STRATEGY, 28 JULY 2011
Waktu Kegiatan
08:00 – 09:00 Participant registration
09:00 – 09:20 Opening remarks
09:20 – 10:20 Key Person Presentation:
Dr. Ir. Endah Murniningtyas, MSc , Deputy Minister for Natural Resources and Environment, BAPPENAS
“Strategi untuk Pengembangan Green Economy di Indonesia.”
Dr. Kindy Sjahrir, BKF
“Fiscal Avenue for Green Growth.”
10:20 – 10:30 FGD's Technical Guidance by Consultant
10:30 – 12:00 FGD (Plenary discussion)
12:00 – 12:30 Harvest by consultant
12:30 – 12:40 Closing remarks
12:40 – 14:00 Lunch break
Describe the overall main activities and outputs/discussions/outstandings
under each agenda)
1 Introduction
The objective of the second Focus Group Discussion is to highlight some key strategies
developed from previous FGD and discuss these with relevant stakeholders. The purpose is
to get reactions, elaboration, and scrutinizing challenges and opportunities in their
implementation.
The first focus group discussion itself highlighted various issues, problems, and gaps in the
existing initiatives to promote green economy in Indonesia. Among those gaps, the
followings can be considered the keys:
5. The green economy concept has not been well-understood especially at the grass root
level
6. Green economy initiatives do exists in Indonesia, yet its effectiveness in achieving
measurable targets relative to our economy or to the damage that we have done is
hardly discussed.
7. Failures in scaling-up of many good initiatives may have been attributed to the
ineffective and inconsistent market regulation; risk of losing competitiveness; financial
constraints; and sub-optimal coordination; and
8. Big push, macro level reform like removing energy subsidies has been constrained by
social and political barriers.
In order to narrow those gaps, the following general strategies can be identified yet should
be elaborated into workable policies and programs:
Strategy 1: Establishing and quantifying targets of greening the Indonesian economy at
macro, micro, sectoral, and regional level.
Strategy 2: Breaking social and political barriers of abolishing energy subsidies
Strategy 3: Harmonizing policies and programs across government agencies through the
revitalization or the creation of effective coordinating institutions.
Strategy 4: Promoting green investment by private financing with complementary public
capital expenditure.
Strategy 5: Creating and revitalizing market regulation that is effective, consistent without
reducing economic competitiveness.
Strategy 6: Revenue-neutral tax substitution to encourage favourable behaviour of
economic agents toward green economy.
Strategy 7: Optimizing the inter-governmental fiscal relation to promote green economy.
Strategy 8: Strengthening the existing environmental regulatory agencies.
Strategy 9: Promoting behavioural changes toward green economy across all elements of
society through systematic, structured, and long-term oriented public
education.
2 Perspectives from Bappenas and Ministry of Finance
The FGD featured two presentations from two strategic government agencies: Bappenas and
Ministry of Finance. Bappenas sees green economy as an integral part of a broader concept
of sustainable development and emphasizes that green economy must always be related to
other development agendas. Its place in the context of development planning is by bridging
the gap between the Millennium Development Goals (MDGs) and The Environment or natural
capital. Commenting to the 9 strategies, Bappenas reminded that there should be distinction
between long-run and short-run strategies.
Ministry of Finance (MoF) sees the green economy cannot be implemented without changing
the structure of incentives in the economy. Low returns on green economy (such as green
investment) is the biggest obstacles to its success. The key element for changing this
incentive structures is fiscal policies. MoF also recognized that energy pricing reform is
necessary for green economy and highlighted some policy reform options. However, it seems
that those options presented is not really straightforward and does not take into account the
element of urgency in regards to the waste of resources involved from spending around $20
billion per year for energy subsidy.
3 The nine strategies
3.1 Strategy 1 - Establishing and quantifying targets of greening the Indonesian
economy at macro, micro, sectoral, and regional level
The strategy (strategy 1) of establishing and quantifying targets of greening the Indonesian
economy at macro, micro, sectoral, and regional level is indeed important. Indonesian
government has given an example of implementing this strategy through its national action
plan to reduce greenhouse gasses emissions by 26% (with domestic resource and an extra
15% with international assistance). This is a good example of how quantification of target
can be implemented. However, this strategy only focuses on climate change yet there are
many other pressing environmental problems not addressed by this national action plan like
local pollution, water resource, and biodiversity. At the practical and regional or local level of
economic planning, to work, these targets have to be reflected as well with spatial planning.
3.2 Strategy 2 - Breaking social and political barriers of abolishing energy subsidies
With regard to strategy 2 on breaking the social and political barriers of reducing fuel
subsidy, there is a tone of optimism coming from various stake holders. As evidenced by
various studies like mapping of societal elements, fuel pricing reforms is not actually
objected by the majority of elements within the civil society. Elements of the civil society can
be surprisingly open for rational and discussion about the reforms. The remaining stumbling
block is actually political barriers. Political opponents of any government in office will always
see any plan of reform as potential political advantages. In the current political map without
single majority, political calculation has been the main reasons for the slow reform. This
situation is quite in contrast to the idea that political parties or parliaments are supposed to
be a representation of society of which majority of it is not resistant to the fuel pricing
reform.
Interestingly, energy subsidy has been seen by stakeholders including key government
officials and representative from electricity company (PLN) as blocking the way toward the
green economy. The fact that the subsidies goes to wrong beneficiaries are the primary
concern. All consumers including large-scale industries do enjoy the subsidy. The general
understanding is that subsidy is not always a wrong policy measure so long as it is correctly
targeted. One way of better targeting is by changing it from subsidizing commodities into
directly subsidizing people who need them. The potential of consensus on the attitude
towards the fuel subsidy is right before us. Political barrier now is identified as the single
bottleneck for reform.
3.3 Strategy 3 - Harmonizing policies and programs across government agencies
through the revitalization or the creation of effective coordinating institutions
Some of the stakeholders see that harmonizing policies and programs across government
agencies through the revitalization or the creation of effective coordinating institutions
(strategy 3) is necessary to implement a green economy strategy that works. A good
example of problems attributed to sub-optimal coordination and harmonization of policies is
in geothermal development. First, geothermal is planned to be a good substitute of fossil
fuels, yet its competitiveness in relative to fossil fuels is still low due to bad pricing policies
and excessive development of cheaper fossil energy like coals. Second, geothermal
development is conflicting with land acquisition regulation where its authority lies with
regional or local government. There are some cases where full support from regional
government is not as strong as expected for reasons like unfair distribution of benefit from
geothermal revenues as perceived by regional government. Another example of sub-optimal
harmonization that is seen by stakeholders is our policy on sales of natural gas. High
domestic demand seems to be sacrificed for foreign exports. Natural gas is relatively cleaner
compared to other fossil fuel like coals hence; its consumption is favourable from green
economy’s perspective.
3.4 Strategy 4 - Promoting green investment by private financing with
complementary public capital expenditure
Possible focuses of attentions are pointed out in the discussions regarding the strategy 4 of
promoting green investment by private financing with complementary public capital
expenditure. Investment in geothermal sector does need a major government role due to
high risk involved in the phase of exploration and exploitation. Private-public partnership
(PPP) should be exploited to as a strategy to promote green investment in other areas. There
is room of opportunity as the institutional foundation for this scheme has been established
such as the setup of the Indonesian Infrastructure Guarantee Fund (IIGF). This can be used
as good instrument for managing fiscal risks. As far as green economy strategy is concerned,
however, any scheme related do the PPP approach need to be tailored to promote specifically
green investment or green infrastructure such as in energy sector and transportation sectors.
The incorporation of green economy agenda in this effort needs to be ensured.
3.5 Strategy 5 - Creating and revitalizing market regulation that is effective,
consistent without reducing economic competitiveness
Private sector initiatives in green economy activities have been widely observed.
Technological conversion for energy conservation, for example, has already taken place in
industries. However, to make this kind of activities extended covering the majority of
business entities, market regulation is very crucial because the business-as-usual
unregulated markets are not favourable toward green economy. Corporate Social
Responsibility need to be enhanced with a structured incentive system modified through
appropriate regulations. Such regulations need to at least have the following properties: (1)
The regulation or the change in the regulation needs to have clear objectives and important
(non-negligible, big in size relative to the economy) and measurable impacts; (2) the
regulation need to minimize the deterioration of our industries’ competitiveness especially to
our foreign trading partners; (3) a guarantee that the changing in regulation will be
consistent across the long period of time.
3.6 Strategy 6 - Revenue-neutral tax substitution to encourage favourable
behaviour of economic agents toward green economy
Revenue-neutral tax substitution is a policy of increasing some taxes, such to discourage
polluting or resource-intensive activities yet reducing other taxes (or subsidizing) such as to
encouraging green economy or green investment or even any general taxes that can
encourage economic activities or to neutralize adverse impact of introducing the new taxes.
Increasing tax alone can be perceived negatively by businesses, yet the idea of tax
substitution may have less or even zero negative perception. Stakeholders, however, pointed
out some possible difficulties in the implementation of such taxes. The tax jurisdiction, for
example, is disproportionately under the authority of central government. One good example
is indirect tax or value added tax. Engineering the indirect taxes to discourage resource-
intensive or pollution intensive activities may have different consequences to regions,
because different regions have different kind of natural resource and environmental
problems. Implementing local taxes, on the other hand, is quite unlikely to have bigger
impact as the authority of local government is relatively low. Another issue is earmarking. In
the context of current fiscal regulation, the implementation of earmarking is not really
straightforward. The difficulties in designing, not to mention implementing, environmental
regulation with potential revenue can be illustrated with how difficult it is the current process
of designing the right and fair mechanism of REDD+.
3.7 Strategy 7 - Optimizing the inter-governmental fiscal relation to promote green
economy
Although green economy is often referred to a strategy of national scale, in Indonesia, local
governments, despite their financial dependency on transfers from central government, have
greater authority in spending as well as other critical authorities. Without overlooking the
potential of local governments in autonomously creating favourable environment toward
green economy or green local/regional economic growth, there is also more rooms to devise
a specific fiscal relation that can create a system of incentives among local governments to
motivate them even more in the pursuit of green economy. The potential element in the
current setting of the inter-government fiscal relation is the allocation of special allocation
fund (Dana Alokasi Khusus or DAK). This DAK can be utilized for the promotion of green
economy by creating a specific allocation scheme that will reward local government whose
policies/programs are in favour of green economy and discourages local governments whose
policies/programs endanger or creating bottleneck for a greener local growth. Currently such
a system is already been discussed in the Ministry of Finance. However, concrete clear
concepts, not to mention its implementation, is yet in place.
3.8 Strategy 8 - Strengthening the existing environmental regulatory agencies
Green economy is a cross-cutting concept, yet the idea will never be achieved without
supporting the existing environmental regulatory agencies, especially, those under the
coordination of the State Ministry of the Environment as well as their local/regional
counterparts as well as other relevant agencies such as the Ministry of Forestry, or Marine
and Fisheries. One crucial function traditionally served by the State Ministry of the
Environment is monitoring progress of environmental protection. The implementation of
green economy involves various activities where this kind of function plays a necessary role.
Investing in natural resources sector to ensure the sustainability of natural resource use such
as water, and other ecosystem are traditional fields of this ministry. Monitoring externalities
coming from various economic activities such as industrial process and transports are also
best served by this agency. With more orientation toward green economy, their capacity
needs to be improved and expanded in particular to ensure the effectiveness of these
activities, governance, not to mention technologies. Current allocation of funding need to be
proportionately shifted to ensure such function serves the reorientation of economic activities
toward green economy.
3.9 Strategy 9 - Promoting behavioural changes toward green economy across all
elements of society through systematic, structured, and long-term oriented public
education
Public education can function as a supporting tool for promoting green economy because it
can help change people’s behaviour. However, this is not a substitute for a good incentive
system in a market society. It is a complement. Public education that works, however, take
times, hence we need long-run strategies. Things that need to be avoided in this kind of
strategy include short-term oriented moral suasion that tend to be sporadic and only
implemented as responses to particular situations. Good public education strategy is
characterized by the following: (a) long-term orientation; (b) covers formal (at all levels of
education) and informal education; (c) recognizing local values/cultures; (d) professional, in
the sense that they are carried out through systematic, structured, and based on best quality
of public communication to ensure its outreach and effectiveness.
EVENT MATERIALS
(Bahan presentasi + Lampiran)
Presentation By Dr. Ir. Endah Murniningtyas, MSc , Deputy Minister for Natural Resources and
Environment, BAPPENAS
STRATEGI UNTUK PENGEMBANGAN GREEN ECONOMY DI INDONESIA
Deputi Bidang Sumberdaya Alam dan Lingkungan Hidup
Disampaikan pada FGD Green Economy Strategy
Hotel Sahid, Jakarta, 28 Juli 2011
1
OUTLINE
I. EKONOMI HIJAU II. PEMBANGUNAN
BERKELANJUTAN DALAM RENCANA PEMBANGUNAN NASIONAL
III.RAN GRK DAN EKONOMI HIJAU
2
I. EKONOMI HIJAU (GREEN ECONOMY)
UNEP, Working Paper v.1.0, 2010
GE adalah konsep yang menghubungkan antara pertumbuhan ekonomi dan keberlanjutan lingkungan.
IMPLIKASI: a. Realisasi pertumbuhan dan kesempatan kerja dari kegiatan
yang rendah polusi ke kegiatan yang efisien menggunakan sumberdaya (pada sektor energi, air , limbah , bangunan pertanian dan hutan)
b. Mengelola perubahan struktural yang tekait seperti dampak terhadap rumah tangga dan sektor ekonomi tradisional.
3
Karakteristik:
Substantially increased investment in economic sectors that build and enhance the earth’s natural capital or reduce ecological scarcities and environmental risks.
Sektor Ekonomi yang tercakup:
Renewable energy, low carbon transport, energy efficient buildings, clean technology, improved waste management, improved freshwater provision,sustainable agriculture and forest management, and sustainable fisheries.
4
II. PEMBANGUNAN BERKELANJUTAN DALAM RENCANA PEMBANGUNAN
NASIONAL
5
Visi: Indonesia yang MANDIRI, MAJU, ADIL DAN MAKMUR
RENCANA PEMBANGUNAN JANGKA PANJANG NASIONAL (RPJPN) 2005-2025
MISI:
1. Terwujudnya masyarakat Indonesia yang berakhlak mulia, bermoral, beretika, berbudayadan beradab
2. Terwujudnya bangsa yang berdaya saing untuk mencapai masyarakat yang lebih makmurdan sejahtera
3. Terwujudnya Indonesia yang demokratis, berlandaskan hukum dan berkeadilan
4. Terwujudnya Indonesia aman dan damai bagi seluruh rakyat serta terjaganya keutuhanwilayah NKRI dan kedaulatan negara dari ancaman baik DN maupun LN.
5. Terwujudnya pembangunan yang lebih merata dan berkeadilan
6. Terwujudnya Indonesia ASRI DAN LESTAR I
7. Terwujudnya Indonesia sebagai negara kepulauan yang mandiri, maju, kuat dan berbasiskankepentingan nasional
8. Terwujudnya peranan Indonesia yang meningkat dalam pergaulan dunia internasional
6
MISI 6TERWUJUDNYA INDONESIA ASRI DAN LESTARI
Ditandai oleh:1. Membaiknya pengelolaan dan pendayagunaan SDA dan pelestarian fungsi LH
yang dicerminkan oleh tetap terjaganya fungsi, daya dukung dan kemampuanpemulihannya dalam mendukung kualitas kehidupan sosial dan ekonomi secaraserasi, seimbang dan lestari.
2. Terpeliharanya kekayaan dan keanekaragaman jenis dan kekhasan SDA untukmewujudkan nilai tambah, daya saing bangsa serta modal pembangunannasional.
3. Meningkatnya kesadaran, sikap mental dan perilaku masyarakat dalampengelolaan SDA dan pelestarian LH untuk menjaga kenyamanan dan kualitaskehidupan.
7
ARAH KEBIJAKAN:a. SDA dan LH Harus dikelola secara seimbang untuk menjamin
keberlanjutanpembangunan nasional danb. Penerapan prinsip-prinsip berkelanjutan di seluruh sektor dan wilayah
Aspek SosialSocial Aspects• Kesetaraan
/equitability• Kesehatan /health• Pendidikan /
education• Perumahaan /
housing• Keamanan
/security• Kependudukan /
population
Aspek ekonomiEconomic Aspects• Struktur Ekonomi /
Economic Structure
• Pola Konsumsi danProduksi / Consumption and Production Pattern
Aspek LingkunganEnvironment Aspects• Atmosfer/
Atmosphere• Lahan / Land• Laut dan Pesisir /
Marine and Coastal Areas
• Air Bersih/Fresh Water
• KeanekaragamanHayati/ Biodiversity
Aspek KelembagaanInstitutional Aspects• Kerangka Kerja
Kelembagaan / Institutional Framework
• KemampuanInstitusi / Institutional Capability
Framework for Construction of Suistainable Development Indicators, September, 2001
MDG
GovernanceGreen Economy
Environment and Biodiversity (IBSAP)
Pembangunan lingkungan secara konkrit (terukur dan dapat diinternalisasikan)RAN GRK sebagai momentum untuk membangun green economy
mewujdukan pembangunan berkelanjutan
8
III. RAN GRK DAN EKONOMI HIJAU
9
10RAN GRK: 1. Komitmen Indonesia: cara dan instrumen untuk meningkatkan kualitas kehidupan dari “brown” menjadi “green” dan berkelanjutan.2. Kontriusi Indonesia untuk menurunkan emisi global.
Komitmen PresidenDi G-20 Pittsburgh dan COP15Penurunan emisi GRK pada tahun 2020
26% 26+15=41%
BAU BAU + international supports
RAN GRK
BAPPENAS
10
KEHUTANAN DAN LAHAN GAMBUT
PERTANIAN
ENERGI DAN TRANSPORTASI
INDUSTRI
LIMBAH
RAN GRK
1. Kesempatan untuk mengkuantifikasikan(ukuran kuantitatif) pembangunan lingkungan
2. Kesempatan untuk menghargai (valuasi) jasa lingkungan penyediaan jasa lingkungan menjadi salah satu pilihan ekonomi.
3. Ukuran dan valuasi alat untuk internalisasi masalah lingkungan dan kelestarian lingkungan ke dalam setiap aspek kehidupan. Internalisasi ke bidang ekonomi menghijaukan ekonomi (green economy).
11
Kuantifikasi1. Penciptaan ukuran atau proxy ukuran rumus
internasional local context (ukuran lokal atau indikator lokal)
2. Inventory: status saat ini skenario penurunan pada masing-masing sektor dan secara nasional.
3. Valuasi dari ukuran mekanisme “pasar” – insentif-disinsentif.
4. Internalisasi ukuran dan valuasi perilaku di berbagai bidang/kegiatan ekonomi dan kehidupan.
5. Ketersediaan data: nasional dan lokal konsisten dan kontinyu
6. Kemudahan untuk mengukur, memantau dan mengevaluasi: lokalnasional internasional
12
Presentation By Dr. Kindy Sjahrir, BKF
Fiscal Avenue for Green Growth
Centre for Bilateral and Regional PolicyFiscal Policy Office
28 July 2011
Outline:
Fiscal Tools for Green Growth
Green Growth – Phasing Out Fuel Subsidy
Mid-Term Expenditure Framework - Green Infrastructure
Challenges
1. Fiscal Tools for Green Growth
2
Green Growth: Inclusive Growth
Source: OECD
Inclusive Growth: How to Green Growth?
Public Policy Options for Green Growth
Principles for Green Fiscal Policy
• inclusive costing: carbon tax or cap-and-trade
• Perverse incentives and distorting policies
minimized
• Non-price market failures alleviated
• Externalities (non-carbon) internalized
• Linking in with development objectives
• Distributional issues addressed
• International dimension – do fair share, make
use of available financing and support
Fiscal Instruments: Finance Minister Regulation on Green Growth
• No.24/PMK.011/2010 ttg Pemberian Fasilitas Perpajakan
dan Kepabenan untuk Kegiatan Pemanfaatan Sumber
Energi Terbarukan
• No.176/PMK.011/2009 ttg Pembebasan Bea Masuk atas
Impor Mesin serta Barang dan Bahan untuk
Pembangunan atau Pengembangan Industri dalam
rangka Penanaman Modal
• No.154/PMK.011/2008 ttg Pembebasan Bea Masuk atas
Impor Barang Modal dalam rangka Pembangunan dan
Pengembangan Industri Pembangkit Tenaga Listrik untuk
Kepentingan Umum.
2. Green Growth – Phasing Out Fuel Subsidy
8
Regulatory Framework on Fuel Subsidy
9
Assumption in setting –up fuels subsidy: ICP, exchange rate,Alpha, MOPS, and fuel volume
Payment of subsidized fuels according to supreme auditors (BPK-RI)
Allocation for subsidized fuels varied according to changes in
parameters in revised budget (APBN-P)
Law No.22/2001 on Oil and Gas
Govt Regulation No.36 /2004 on Downstream Oil and Gas
Presidential Decree No.55/2005 on retail domestic fuel prices and preceeding Presidential Decree No.9/2006
Presidential Decree No.71/2005 on Provision and Distribution of Particular Typer of Fuels
a
Fuel Subsidy Calculation Formula
• Retail fuel price is the retail selling price per liter of fuel in domestic area.
• Tax is a Value Added Tax (PPN 10%) and Motor Vehicle Fuel Tax(PBBKB 5%).
• Reference price of fuel is calculated based on the MOPS price plus distribution costs and margins.
• Reference price of fuel = MOPS + α
α is the distribution cost + margin
MOPS (Mid Oil Platt’s Singapore) is the price on the stock sale and purchase transactions on the Singapore oil
Fuel Subsidy :
= [Reference Price of Fuel - (Retail Fuel Prices - Tax) ] x Fuel Volume
0
1000
2000
3000
4000
5000
6000
7000
8000
MOPS Official Price Retail Price
IDR/liter
a
VAT & PBBKB
Subsidy
Reference price of Fuel
10
Non-Discretionary Spending
During period 2005-2010:
• 34% average from Fiscal Capacity (State Revenue) spent for transfer to local government, 21% for subsidy and 21% for Wages and Capital Expenditure.
• More than 15% of State Revenue spent for debt interest and other expenditure.
11
Mandatory Spending Ratio, 2005 - 2010
toexp
to net rev
toexp
toexp
toexp
toexp
toexp
to net rev
to net rev
to net rev
to net rev
to net rev
Transfer to local gov Subsidy Personnel exp Interest exp Goods exp Other exp
0
20
40
60
80
100
To exp To net rev
2005 2006 2007 2008 2009 2010
90 9185
8985
92 87 88 85
93
85
97
per
cen
tage
Mandatory Spending Ratio 2005 - 2010
Transfer to region Subsidy Personnel Exp Interest Payment Capital Exp Other Exp
To exp To expTo exp To expTo expTo net rev
To net rev
To net rev
To net rev
To net rev
Indonesia Fuel price compared with the ASEAN countries is still very low
0
5,000
10,000
15,000
SINGAPORE PHILIPINE THAILAND VIETNAM MALAYSIA INDONESIA
8,4
29
6,5
90
7,3
67
7,0
49
4,7
84
4,5
00
11
,56
0
8,4
51 8
,77
7
7,7
59
5,0
66
4,5
00
IDR/Liter
GDP/Capita :
DIESEL GASOLINE
USD 33.714 USD 1.582 USD 3.470 USD 779 USD 6.648 USD 1.748
12
Fuel Subsidy Policy
Policy 2011:
1. Continuing kerosene to LPG conversion program,
2. Controlling subsidized fuel consumption through close distribution system,
3. Limiting the user of subsidized fuel,
4. Enhancing the development of alternative energy,
5. Subsidized bio-fuel by average at IDR2.000-IDR2.500 per liter,
6. Increasing Fuel Vehicle Tax (PBBKB)by 5 percent.
Policy 2010:
• Limiting subsidized fuel users to households, micro businesses, fishery businesses, public transportation and public services
• Reducing the consumption of fossil fuels by introducing new types of bio-fuel
• Continuing kerosene to LPG 3 kg conversion program
• Improving the subsidized fuel distribution mechanism to enable the subsidy to be more targeted
• To enhance monitoring of subsidized fuel distribution, increasing sanctions for misuse, and reforming the fuel business sector administration
13
Policy Framework for Phasing Out Fuel Subsidy
•Rising fuel consumption
•Fuel prices increases
•Bottleneck domestic refineries
•Restricting domestic fuel stock
•Insufficient infrastructure and transportation
•Ineffective fuel subsidy
Current Condition
Fuel Subsidy Alleviation
•Decreasing energy intensity
•Provision of sufficient infrastructure and transport of fuel
•Alleviating fuel subsidy along with compensating variation
•Energy diversification
Strategy
•Lower volume of subsidized fuels
•Minimum subsidy on fuels
•Non-fuel diversified renewable energy sources
Target Condition
Strategy of Subsidy Reform
The phasing out of inefficient fossil fuel subsidies in Indonesia is to
be implemented in a gradual manner in order to minimize the spill-
over impact on the poor noting that a large part of the consumption
basket of the poor is affected by higher fossil fuel prices.
The phasing out strategy is to be sequenced through managing the
demand side by adopting measures that will reduce fossil fuel
energy consumption and then by gradually narrowing the gap
between domestic and international prices. 14
• Transform price subsidy to direct subsidy
• Social Safety Net to shield the vulnerable
a. Energy diversification
b. Closed distribution system
c. Fiscal incentive and disincentive
a. Minimizing fuels distribution cost
b. Full cost absorption of fuel provision
c. Effective targeting and costing of fuels subsidy
Reduction
of Fuel Subsidy
Compensating Variance
Less Volume of Subsidized
Fuels
Fuel Price Reference
Mid-Term Development Plan Fuel Subsidy Phase-out Strategy
Subsidized Fuel and Target Subsidy
Sep ' 05 Okt ' 05 Apr ' 06 2007 2008 2009 2010 2011 2012 2013 2014
Household S S S S S
Small Business S S S S S
Industry NS NS NS NS NS NS NS NS NS NS NS
Transportation S S S S S
Fishery NS NS S S S
Industry NS NS NS NS NS NS NS NS NS NS NS
Transportation S S S S S
Fishery S S S S S
Industry NS NS NS NS NS NS NS NS NS NS NS
Sea Freight Industry NS NS NS NS NS NS NS NS NS NS NS
Sea Freight Industry NS NS NS NS NS NS NS NS NS NS NS
Gasoline
Kerosene
S/Closed 2
S/Closed 2
S/Closed 2
S/Closed 2
S/Closed 1
S/Closed 1
Diesel
S/Closed 2
Fuel Oil for Sea Freight Industry
Diesel Oil for Sea Freight Industry
S/Closed 1
S/Closed 1
S/Closed 1
Stage V Stage VI
S/Closed 2
S/Closed 1
Fuel UserStage VII Stage VIII
16
S = Subsidy : Still subsidized
NS = Non Subsidy : Not subsidized
S/closed 1 : Test arrangement for closed distribution system (2009-2010)S/closed 2 : The trial closed distribution system in gradually (2011-2014)
Potential reform options But a number of alternative options could be considered
1. The ESDM Road Map (January 2010)
Phased and gradual reduction in subsidies with a focus on household sector and,
to a lesser extent, commercial transport sector
Alternative could exempt motorcycles given sensitivity of this user group
2. Convertible fuel vouchers
All households without a car are eligible for a monthly voucher entitling them to
purchase a fixed quantity (eg, max 15 L) of gasoline at a fixed discount to the
economic price. These vouchers would be convertible into cash (ie, redeemed for
cash value).
3. Indexation of regulated fuel prices to the economic cost of fuel
Regulated fuel prices are a fixed percentage (eg, 90%) of the economic cost of
fuel
Compensates poor households through Keluarga Harapan & increased social
spending
4. Full deregulation of fuel prices with compensating KH program
Gradually deregulate gasoline & diesel fuel prices by 2014 using appropriate fuel
price mechanism which gradually closes gap with economic price
Compensate poor households through KH & increased social spending
Could be done in one “big bang” or gradually using appropriate fuel price
adjustment mechanism which gradually closes gap with economic price
Could reduce subsidies for gasoline first since benefits poor less
17
• Targeted subsidies allocation• Developing alternatives energies (coal, gas, geothermal)• Agriculture integrated subsidies• Food subsidies allocation• Improving PSO subsidies effectivity (Pelni, Pos, Kereta Api)• Tax subsidies
Subsidies Policies, 2009-2014Subsidies Policies 2009-2014
18
-
5.0
10.0
15.0
20.0
-
50.0
100.0
150.0
200.0
250.0
2010 2011 2012 2013 2014
%
In ID
R T
rillio
n
Non Energy Subsidy Energy Subsidy % to GDP % to Total Exp
88.9 92.8
56.051.1
44.3
-
3.0
6.0
9.0
-
30.0
60.0
90.0
120.0
2010 2011 2012 2013 2014
%
In ID
R T
rillio
n
Fuel Subidy % to Total Expenditure
Medium Term Expenditure Framework Fuel Subsidy
3. Mid-Term Expenditure Framework - Green Infrastructure
19
Fiscal Risk
• Government fiscal risk matrix
• Government has to deal with fiscal risks under
transparent and accountable management of
fiscal to ensure the sustainability.
DirectObligation in any even
ContingentObligation if a particular
event occurs
ExplicitGovernment liability created
by a law or contract
Government Debt Government Guarantees
ImplicitA “political” obligation of
government that reflects public
and interest-group
pressures
Longstanding and popular
social spending that
government could, in
theory,
cut.
Obligation to bail out banks
that are too big to fail
Source : Government at Risk: Contingent Liabilities and Fiscal Risks, 2002.
20
Infrastructure Development • Financial crisis in the late 1990s caused the investment of
infrastructure fell down from more than 6 percent of GDP, or about USD15 billion/year, to 2 percent of GDP and most of that is spent on maintenance.
• To recover the economic situation, PPP scheme is the reasonable option in developing infrastructure for more efficient and effective government spending.
• Projection of infrastructure investment needed in 2010-2014
*) Source: Bappenas, 2010
USD214Bio
USD 140 Bio
USD74 Bio
Total Funding Needed
Gov’tBudge
t + SOE
Funding Gap
Private
PPP Scheme is expected to cover around 50% of
total private funding needed
21
USD74 Bio
PPP Scheme Raises Government Risks
• Since 2005, GOI has committed to support the infrastructure
development by the PPP scheme.
• To implement the PPP scheme, private investors need government
guarantees to ensure their investment in infrastructure projects.
• The provision of government guarantees create fiscal risks.
• Guarantee, provided by government support letter (conventional
guarantee), negatively influences the fiscal sustainability.
Conventional Guarantee Ideal Guarantee
blanket Specific risks
immeasurable measurable
support letter guarantee agreement
direct (probable cause a sudden shock)
indirect - none(ring fence mechanism)
no-regulation by regulation (transparent and accountable)
Coverage Risk
Exposure
Form of Guarantee
Impact to Gov. Budget
Legal basis
Guarantee Fund as a Fiscal Instrument
The Indonesia Infrastructure Guarantee Fund (IIGF) has been established as an instrument in managing fiscal risks.
IIGF could leverage their capacity and capability by cooperation and partnership with multilateral agency and other institutions.
23
Transparent and Accountable Management
Appraising and structuring process (including risk allocation) of the PPP project are more professional, consistent, and independent;
Risk coverage is stated in the form of agreement between IIGF and project company (investor);
The project risks are measured accurately;
Providing ring fence to the Government balance sheet because the guarantee claim will be paid by the IIGF first;
Public, especially private investor and lender, will be easier to access the information of guarantee mechanism and the exposure of the liabilities;
Government does not have to reserve fund to ensure the fiscal sustainability.
IIGF
Illustration on Ring Fence Mechanism
Without IIGF With IIGF
Project Company
Gov. Budget
Project Company
Contingent Liability
Gov. Budget
Contingent Liability
Guarantee
Guarantee
Capital injection
Ring Fencing
1
2
24
1
IIGF
23
3. Challenges
25 26
Usage Efficiency
Development Program
Macro & Fiscal Policy
Minister of Finance
Ecosystem Policy
Min. Environment
Building ,Construction
Civil Works
SOEs Policy
State Owned Enterprises
A/R Forest Resources
Forestry
Manufacturing, Processing
Energy & MiningIndustry
Modality & Policy
Transports
Invest & Financing
Coord. Econ AffairsD N P I
Min Energy & Mineral
BP Migas
BPH Migas
Pertamina P L N
Mining
Forest Industry
Planning (Bappenas)
Public Transports
Appliances
Building
Regio
n G
ov
National Action Plan
R/E, CSS, Supply Efficiency
LULUCF, REDD
National Roadmap
Green PaperLow Carbon
The Need for Policy Coordination
TERIMA KASIH
FGD's Technical Guidance by Arief Anshary Yusuf, SE., M.Sc., Ph.D
4 Key highlights from previous activities
The green economy concept has not been well-understood especially at the grass root level
Green economy initiatives do exists in Indonesia, yet its effectiveness in achieving measurable targets relative to our economy or to the damage that we have done is hardly discussed.
Failures in scaling-up of many good initiatives may have been attributed to the ineffective and inconsistent market regulation; risk of losing competitiveness; financial constraints; and sub-optimal coordination; and
Big push, macro level reform like removing energy subsidies has been constrained by social and political barriers.
9 key strategies (1-5)
Strategy 1: Establishing and quantifying targets of greening the Indonesian economy at macro, micro, sectoral, and regional level.
Strategy 2: Breaking social and political barriers of abolishing energy subsidies
Strategy 3: Harmonizing policies and programs across government agencies through the revitalization or the creation of effective coordinating institutions.
Strategy 4: Promoting green investment by private financing with complementary public capital expenditure.
Strategy 5: Creating and revitalizing market regulation that is effective, consistent without reducing economic competitiveness.
9 key strategies (6-9)
Strategy 6: Revenue-neutral tax substitution to encourage favorable behavior of economic agents toward green economy.
Strategy 7: Optimizing the inter-governmental fiscal relation to promote green economy.
Strategy 8: Strengthening the existing environmental regulatory agencies.
Strategy 9: Promoting behavioural changes toward green economy across all elements of society through systematic, structured, and long-term oriented public education.
DOCUMENTATION OF THE EVENT
Name of The Event : FGD 2 Green Economy Strategy
Venue : Hotel Sahid Jaya, Jakarta
Date : July 28th, 2011
Openng Remarks by
Dr. Arief Anshory
Yusuf, Senior Green
Economy Expert
Presentation ”Strategi
untuk Pengembangan
Green Economy di
Indonesia ” by Dr. Ir.
Endah Murniningtyas,
M.Sc, Deputy Minister
for Natural Resources
and Environment,
BAPPENAS
Presentation ”Fiscal
Avenue for Green
Growth” by Dr. Kindy
Sjahrir, M.Sc, BKF
FGD Participant
Focus Group
Discussion
Focus Group
Discussion