Jakarta — Indonesia’s new finance minister should use the leadership transition to strengthen sustainable finance and ensure public and private capital supports forest protection and environmental resilience, the Indonesian Working Group on Forest Finance (IWGFF) said on Tuesday, September 15.
President Prabowo Subianto appointed Suahasil Nazara as finance minister on Monday, replacing Purbaya Yudhi Sadewa. IWGFF said the change should be an opportunity to reinforce the credibility, transparency and accountability of Indonesia’s fiscal and financial policies.
The forestry finance group called for the state budget, fiscal incentives, taxation, banking finance, investment and management of state assets to be aligned with the transition to a low-carbon economy, forest conservation and climate resilience.
It also urged the government to prevent financing that could create environmental risks, saying stronger coordination was needed among the Finance Ministry, the Financial Services Authority (OJK), Bank Indonesia, law enforcement agencies and ministries overseeing natural resources.
“The state budget must take into account costs that have often gone unnoticed: the loss of forest cover, emissions, forest and land fires, damage to river basins, and the costs of environmental restoration,” said Marius Gunawan, IWGFF’s forestry and environmental expert.
He said development that appears inexpensive in the short term could become costly for the government and communities if environmental risks are ignored.
IWGFF said the new minister would face the challenge of balancing government spending priorities, fiscal discipline and economic stability with the growing need for sustainable finance.
It called for stronger application of additionality, transparency, environmental and social safeguards, and accountability in financing, while encouraging continued development of green finance, sustainable finance, blended finance and performance-based financing mechanisms with clear integrity standards.
The group also urged the government to strengthen “follow the money” and “follow the asset” approaches to economic crimes involving forests and other natural resources. Tracking financial flows, asset ownership and links between businesses and financial institutions could help ensure that forestry, mining and plantation-related crimes are addressed not only as sectoral violations but also as financial and governance issues.
IWGFF said it hoped Nazara’s leadership would help accelerate the transformation toward a greener and more transparent financial system while ensuring finance becomes part of the solution for forest and environmental protection. (nsh)
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