Indonesia is preparing to simplify its approach to attract increased foreign investment and banking participation in projects aimed at reducing emissions.
A forthcoming white paper will outline the actions required to secure private capital necessary for achieving the nation’s climate objectives, reported Bloomberg.
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Officials in Indonesia have completed the governance framework and implementation strategy for a new entity designed to coordinate the nation’s various regulatory policies, as detailed in a copy of the white paper reviewed by Bloomberg.
The Sustainable Finance Committee is expected to consist of around 20 members including senior figures from the Financial Services Authority, the Finance Ministry and Bank Indonesia.
Coordinated by the Finance Ministry, the committee was established through law in 2023.
Membership is set to be confirmed in the first quarter of 2026 (Q1 2026), and the committee will operate with a secretariat and thematic working groups to fulfil its responsibilities.
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By GlobalDataGreen Finance Institute external affairs managing director Simon Horner said the committee is designed to help investors navigate regulations, sector incentives, project pipelines and risk-mitigation tools for transactions in what he described as “a huge and quite investable market”.
Horner said investors have expressed that “they need stronger, more credible, more transparent institutions to commit capital to the Indonesian market.
“They don’t always understand how the political system works, the role of the domestic development finance institution, the involvement of state-owned banks in transactions.”
Indonesia’s most recent climate plan, referred to as a nationally determined contribution (NDC), forecasts that emissions will reach their highest point in 2030 under economic growth scenarios.
As with many emerging economies, Indonesia claims to have limited fiscal capacity for climate spending and has faced challenges in attracting investment from developed countries.
In its NDC, the country estimated that a minimum of $472.6bn in investment will be necessary to meet its climate goals, according to Bloomberg.
The Finance Ministry reported that from 2018 to 2023, the government allocated Rp702.9tn ($42bn) to programmes related to climate.
The Just Energy Transition Partnership (JETP), a $20bn pledge from developed nations to support the closure of coal plants and advance clean energy, has so far resulted in around $3bn in approved financing and four projects, according to figures from the Finance Ministry’s official website.
The US withdrew from the JETP in March.
Indonesian President Prabowo Subianto has set a goal for Indonesia to shift entirely to renewable energy by 2035.
The government has also prioritised six sectors including water, food, energy and health as “national adaptation priorities”, as the $1.4tn economy faces heightened risks from extreme weather events linked to climate change.
In Q3 2025, foreign direct investment (FDI) into Indonesia dropped by 8.9% year-on-year to Rp212tn after a 6.95% drop in Q2 2025, when it stood at Rp202tn.
In Q3, Singapore was the leading source of FDI, providing $3.8bn, or 28.8% of the total. It was followed by Hong Kong with $2.7bn (20.3%) and China with $1.9bn (14.1%). Malaysia and the US also figured among the top five investors, contributing $1bn (7.4%) and $800m (5.8%), respectively.
