20 January 2020 (closed)
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Although recently having slowed, Indonesia has experienced solid economic growth over the past ten years, with the country’s gross domestic product (GDP) almost doubling between 2001 and 2012. However, robust economic growth also resulted in significant environmental degradation and accelerated depletion of Indonesia’s natural resources. Sri Mulyani Indrawati, World Bank Group Managing Director (and former Indonesian Finance Minister), emphasized that Indonesia needs to shift from a ‘brown’ to a ‘green’ growth model.
A green growth model would ensure sustainable growth and would benefit everyone. Sri Mulyani uttered these words at the 2015 Indonesia Green Infrastructure Summit, held in Jakarta on 9-10 June. The summit, hosted by Indonesia’s Chamber of Commerce (Kadin Indonesia) and supported by the World Bank Group, showcased Indonesia’s efforts to develop the ‘green’ growth model – strengthening the partnership of the government and private sector - as part of the medium term development plan which runs until 2019 (and is followed by the new medium term development plan).
A brown growth model - dependent on fossil fuels, extractive industries, and fast depletion of the country’s natural resources - leads to increased vulnerability to climate change as well as poverty in those areas impacted by brown growth.
Indonesia’s poverty rate has halved since the year 2000, to 11.0 percent in 2014. However, research shows that those people living in environmentally-degraded areas suffer from higher poverty rates and are plagued by a higher risk to fall into poverty as they are vulnerable to shocks, including environmental shocks and lack resilience to natural disasters. ‘Brown’ growth has caused flooding in urban regions, forest fires, in rural regions, overfishing as well as coastal ecosystem degradation.
By continuing to rely on ‘brown’ (unsustainable) growth, Indonesia will become more and more constrained by limited opportunities and is set to face economic stagnation. The ‘green’ growth model, on the contrary, brings benefits for many decades to come. Sri Mulyani emphasized that developing countries can take the lead in leapfrogging from brown to green growth. Moreover, poverty eradication need inclusive and environmentally sustainable growth.
Transformation to the ‘green’ growth model also entails challenges. These challenges include the need for large financing, right policies, good governance.
As Indonesia still requires huge infrastructure and property development, there remain ample opportunities for ‘green’ development. For example, in the transportation sector Indonesia requires 2000 kilometers of additional toll-roads, over 3200 kilometers of railway, 15 airports, and 24 new ports in order to improve inter and intra connectivity. One project that manifests the ‘green growth’ vision is the Teluk Lamong Port, north of the Tanjung Perak Port in Surabaya (East Java). Indonesian President Joko Widodo is set to inaugurate this port soon. The port is the first one in Indonesia that uses a rail system for container traffic.