Jakarta – Indonesia has the potential to become the hub for impact investment in Southeast Asia as this type of investment is gaining momentum, observers and business players say.
Impact investing means investing in companies, organisations, projects, or funds with the deliberate intention of generating a measurable positive social or environmental impact alongside a financial return. It is essentially using money to create beneficial social and environmental effects while aiming to profit.
The yield or return of the Impact investment adds unique value dimensions to investments. It is compatible with a range of financial returns from below market to above market rate, depending on investors’ strategic goals. Impact investments can be made in markets at any stage of growth.
“If we look at the prospect, Indonesia has a large potential to lead impact investment in South East Asia,” Rizky Wisnoentoro, the Head for Sustainable Finance Study at Universitas Islam Internasional Indonesia, said at a dialogue with media on Impact Investment in Jakarta late last week.
The other speakers at the dialogue were Dessi Yuliana, CEO of Carbon X; Petrus Gunarso, Environment observer and Business Development Advisor at PT Transportasi Gas Indonesia; and Fikri Syaryadi, CEO of Bumandhala Impact Fund.
As the global climate crisis has intensified over the past decade, impact investment could be an answer to resolve climate-related crises, including in Indonesia.
Some reports say Indonesia lost 1,000 square kilometres of forest between 2021 and 2022. Illegal fishing has caused the country to lose up to 26 million tons of fish annually in the fishery sector. At the same time, this archipelagic nation has become one of the world’s largest producers of food waste. These problems have contributed to global warming.
Dessi Yuliana, CEO of Carbon X, said during the discussion that one positive aspect is that consumers’ behaviour is now shifting to consider social and environmental impact when purchasing goods. Investors are also increasingly incorporating social, environmental, and corporate governance into their investments.
“Local and global markets demand that companies not only pursue profits but also integrate sustainability and play an active role in addressing environmental issues,” Dessi said.
“Investors should also ensure that every business activity they support implements responsible principles and has a long-term impact on improving the environment and society. This fantastic investment value is still insufficient to address Indonesia’s increasing social and environmental needs,” added Dessi.
Certainly, the rising demand for impact investment reflects a society that is more conscious and willing to invest in a carbon-free future.
Fikri Syaryadi, CEO of Bumandhala Impact Fund, said the impact investment has indeed increased globally and in Indonesia. He cited the data released by the Global Impact Investing Network (GIIN). The agency recorded total assets managed through impact investing worldwide to have reached more than USD1.1 trillion (Rp16,927.9 trillion) at the end of 2024.
Meanwhile, Indonesia has become one of the most active markets for impact investment in Southeast Asia, with a record of successfully attracting investments of US$1.5 billion (Rp23.08 trillion), Fikri noted.
Fikri predicts that the impact investment in Indonesia could grow by up to 20 per cent in 2025 compared to last year, signalling investors’ interest and opportunities in the country.
Indonesia is currently facing environment-related problems such as deforestation, excessive exploitation of natural resources, waste problems, and poverty. Impact investment and other types of sustainable investments could address these problems. Therefore, concerted efforts of business players, investors, the government, and local communities to address these problems. (Roffie Kurniawan)
