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Indonesia’s Green Infrastructure Planning
By: Muhammad Dhafi Iskandar
Green is a color that often used to refer for something natural. In modern days and industrial era, the
term of green is very important and become a symbol of environment friendly and better life quality.
Many countries, including Indonesia, are also aims to realize their vision on green and healthy future for
the next generations.
Mr. Suryo Bambang Sulisto, Chairman of Indonesia Chambers of
Commerce and Industry said that motivated by reasons which in the future,
Indonesian population will be very large, the provision of infrastructure is
needed to support the growth of the population. However, in this
development, especially on the large scale is often hampered by limited
funding from the government, which led the government to also rely on
private investment.
Indonesia is trapped by its strong dependence on non-renewable resources and foreign investment.
Therefore, it is important to unite visions and perspectives of public and private in the scope of national
and international. Initiatives towards green economy need to be encouraged, including through
planning and collaboration on funding strategies and innovation.
Ms. Sri Mulyani Indrawati, Managing Director of World Bank Group informed that
the main goal of World Bank is to end extreme poverty. Rapid growth in economy is
crucial because it makes people have chances and alternatives in order to improve
their life. China has been adopting their green policy and makes a shift to improve
their focus on productivity.
Conventional economy that has been used in several decades, unfortunetely have negative effect on
decreasing of natural resources and destroying the nature. It highly affects the poverty by creating the
scarcity and limiting the access to several vital needs.
We cannot rely on growth alone and the form on sustainability economy is needed. Infrastructure is the
key to help a country achieve and gain its full potential. However, the projects that were funded must be
bankable because it requires several conditions to meet. Hopefully, the project will help to improve
services that are available to all citizens. One of the vital requirements is on how to manage natural
resources responsibly. A good policy is needed to support it.
To have good infrastructures, we need electricity. However, we do face several challenges. In Indonesia,
Coal has its percentage of more than 50% of the total energy mix. The use of local natural resources for
local necessity could reduce the fiscal risk. For example, Turkey reduces its share of oil in their energy
mix and goes to natural gas as their alternative. It reduces not only their energy expenses but also their
level of pollution.
In Indonesia, the activities of mining and palm plantation are making a huge contribution for economy.
The negative side is, it reduce the area of tropical rain forest and create destruction on the environment.
These opportunities on economic development are essential and must be taken. However, an act of
smart and responsible resources management is needed.
On the case of Illegal fishing, around 65% of coral reefs are threatened from these activities.
Moratorium of fishing permits has been declared and must be used wisely to reduce and prevent illegal
fishing that affect local fisherman.
We need to end poverty in sustainable way, with good governance. The lost of material and non-
material on illegal logging and revenue from land permit are not balanced, making a higher side on the
negative result. Overlapping mandates often happens on land use. We need leadership, to make the
shift from ground and exclusive to become inclusive. Nowadays, East Asia countries are the lead on
green development programs and researchs.
Mr. Jusuf Kalla, Vice President of the Republic of Indonesia stated that the
policies of the past often lead to the environmental damage. This happens
because Indonesia's economic policy in 1960-1970 was driven by logging and
trading of Timber. However, many countries tend to blame states that produce
wood raw material, whereas in fact that those countries also buy such product and
is also indirectly contribute to this cause. This is a shared responsibility, between
Indonesia and the world.
Government has closed the door to all mineral raw materials sold abroad without going through the
stage of processing. Wood and forestry sectors are still needed, yet it requires good planning and
organizing to be sustainable in terms of the environment and workers. Supporting the development of
good infrastructure require fundamental change in the economy.
Energy mix is a mix between various types of energy. Going forward, the government's plan is that Fossil
Fuels will no longer be used and the energy from Coal will be limited. Reduction and restrictions
programs are supported with alternative energies of LNG (Liquid Natural Gas) and renewable energy
such as Hydro and Geothermal.
Indonesian renewable energy potential is quite good. Green financing is also needed for the energy
project financing program. The cheapest investment is on Diesel power plant, but requires greater
operational cost, in terms of raw materials. Coal need greater investment than Diesel, but its operating
costs are cheaper. Regarding the pollution levels, there is a new method called as 'Ultra Critical' to
mitigate the effects of Coal pollution. Renewable energy investment is four times compared to Diesel
energy investment and twice compared with Coal energy investment.
The government announced for the supply of 10,000 megawatts through coal energy. In 10 years to
come, 52% of energy will be produced by Coal, 24% from Natural Gas, 12% from Gasoline, and 10%
comes from Water and Geothermal energy. In the future, the use of renewable energy will be increased
to twice, and its long-term target of renewable energy will fulfill the needs of 30,000 megawatts.
For Coal, the main plan is to reduce its pollution, as well as the expansion of the Coal mine and prioritize
the deployment of power plants near Coal mines. This can reduce the negative effects of the
environment and will be more efficient in terms cost. Incentives for alternative energy and disincentives
for mining pure raw materials that sold without going through the process in Indonesia are needed.
Prototype Project of Smart City
The Smart city prototype project is located in Kutai Kartanegara. It could reduce the amount of CO2
pollution by 60% and water consumption by 30%.
Mr. Lukita Dinarsyah Tuwo, Minister Secretary of Coordinating Ministry for
Economic Affairs of Indonesia explained on the planning of Indonesia’s
development in green economy. As a country with the largest archipelago in
the world, sea is very vital, along with its infrastructure as the key of unifier.
Conducive environment creates underpinning fundamentals growth. The
policies that have been made are for decrease of Oil consumption subsidy and
reallocate the spending to infrastructure development.
On global point of view, Indonesia’s economic growth and potential are still positive although it begins
to slow down. The governments need to prepare a policy reform, at least for the medium term plan (5
years), human development, economic development and environmental development. Target for the
economic growth is 8%, with the help of leading sector development.
The special economic zone maps, made from the government of Indonesia are consist of Sei Mangkei,
Tanjung Api-api, Maloi Batuta, Tanjung Lesung, Palu, Mandalika, Bitung, Morotai, etc. As for the
prioritized industrial area, consist of Kuala tanjung, Mangkei, Tanggamus, Landak, Batulicin, Bantaeng,
Palu, Teluk Bitung, etc. The infrastructure development plan, consist of roads, airports, ports, railways,
harbor and BRT, and continued with broadband, reservoir, communal waste system, etc.
There are stages for sustainable development. On the basis, green growth is a must. The current and
future challenges are high competition of space for living and lesser natural resources available. There is
no medium and long term trade off. We must aware on the short term transition.
Indonesia has started on the green economy and need to concept the policy, institutional framework,
regulations and fiscal incentives.
A national strategy for green growth green development is needed along with its roadmap, ‘Green
Growth Roadmap’. It consists of 4 different parts, such as:
1. Indonesia's growth trajectory (part 1);
2. Opportunity in green growth (part 2);
3. Mainstreaming green economy growth in policy, planning and investment along with
relationship and partnership (part 3);
4. Delivering green growth for nation (part 4). We need to focus on developing and implementing
green growth to the policy;
5. The additional part (part 5) is to Integrated Green Growth into project development.
National strategy is needed and mainstreaming is necessary. The mandatory for Biodiesel is 15% on the
content of Diesel fuel and going to 20% in the future. Energy mixture must be developed and increased
to minimize the use and potential risk of non renewable energy. To measure the result, indicators are
needed to explain on how far we have implemented the green projects. Government is targeting that in
2025 we could apply the green GDP.
Sustainable Landscape Management
The main problem of landscaping is deforestation. It is good for agriculture except for logging and
mining activities. Improvement is needed on the government management for natural resources.
On the spatial planning point of view from Ministry of Agrarian, it is set on policy that all development
has to follow the spatial plan. The vision is to achieve on national, economic and environmental goals.
There will be sanction for those who did not follow the rule.
Mr. Putra from the Ministry of Environment said that two third of Indonesian land, can be used as land
banks. It is one of our responsibilities to keep the forest. However, we are faced with 2 contradictive
roles. One is to provide land for the people to use and second is to maintain the environment.
Development must not endanger the surrounding environment.
Landscape could be seen as a living theater where people live and thrive. It is important to utilize natural
resources and commodity with multiple proposes and needs to make it more efficient and effective at
the same time. The key is on the coordination across sectors. Harmonizing all the sectoral plans is
needed for implement the development programs. Another step could be done by publishing the map
and website with available public data so that everyone will be able to see it and make sure the
environmentally assessment has been be carried out.
Challenges for this are not only in technocratic sides but also in the external factors. In the year of 2050,
the population of Indonesia will be mostly in urban areas. The changes will be on estimation of 40-60
million people relocating to urban area, which bring the cases of land grabbing, land converted to urban
area, etc.
Work on detail plans for Indonesia is still on the way. Yet, there are more than 5000 detail plans where
local and central government must do. The main challenge is to move to an economy govern form of
discretion. Sectoral differences, occurs because they do not have one single identical map. In
consequances, we still require to look at the local city maps in order to know the details. This case is the
biggest challenge to build the capacity, especially for the Indonesia development plans and spatial
plans. Link and match with the investor should be the priority. What needed most are some actions.
The Government of DKI Jakarta has the opinion that there must be Incentive and
support, provided by the local government. Indonesia have spatial plans law from
2012, while the more detailed law was created in 2014. DKI Jakarta is now moving
forward to other law regarding the reclamation of island in north of Jakarta.
By the Law number 26, year 2007, they need to provide area for green open space. However, it is
difficult because of the complexity of density and society in this capital city of Indonesia. There are only
9.6 % of green open spaces in Jakarta. It needs the size comparison of 12 times of Monas Park if DKI
wanted to achieve the minimum area for green open space. This alternative approach can be
accomplished by realizing innovative ideas from the example of green roof and natural wall (With plants
surrounding the structure of building). The target set in 2030, to expect the increase of road ratio in
order to decrease the C02 emission.
PT. Riau, a company in plantation and forestry that have already heavily regulated by the government
said that Indonesia need private sector to contribute. What it needs is on how to implement and enforce
that while improving the reinforcement.
The solution and planning that they suggest is an integrated upstream downstream forestry business,
including the Investment in the environment and the people, along with introduction of wood legality
system to every business related to it. As for the restoration of the ecosystem project, as one of the CSR,
should be given incentives instead of tax.
Representative from The Ministry of Agrarian stated that not
all of the local governments have the capability to make the
map. They must rely on other local government or even the
central government, especially for the detail plans. The
Central Government, along with the Ministry, must support
the Local Government by giving and delivering the expertise
in order to train their local staff to have the required skills.
Reference for the map is usually gained from the Geospatial Information Agency / Badan Informasi
Geospasial (BIG). Unfortunately, there are only small percentage who have the ability to make the map.
All forest maps must be based from the basic map produces by BIG. Again, the old problem of sectoral
ego is still quite strong and must be eliminated because it creates problems such as different maps in
each sector.
The problem of using the map is that various institutions are utilizing different scale on it. The primary
solution is to use only one map for the standardization. It would be wise if every ministry put the
contribution together for the same goal and in the same steps. Another thing that should be done is to
resolve conflicts between investment plans and land use plans. In order to move to the next step, it
need better mechanism for conflict resolution through better reform in management. There are around
60% of land dispute in all of the land permit data, which is quite large. What can really be done is to
synchronize between land registries and investment plans.
Spatial planning shall be based on the strategic environmental assessment. The question is, do we have
it yet? If we already have, the conflicts between company, community and government could be easily
prevented. Because of that much portion on the land conflicts, the easiest way to build a toll road is
through the sea. One of the good steps to do is to having a dialogue instead of going to the court when
trying to resolve the dispute. It took a very long process for spatial plans along with the details because
the City Planning Department produced the map and also hired some experts, the Consultants, in which
consume a great deal of cost and time.
Spatial plan is not about space for environment but also
for economy and sustainability for generations as one of
the key issues. ‘Green’ is already adopted in the policy.
What is need is to do some actions. There is the Presidential decree No 38 which needs to be optimized.
Landscape management is very important and it could be use to eliminated the deforestation supply
chain. We need one to one commitment, where every hectare planted, they must conserve one hectare.
It is hoped that in the future, 95% of the company’s energy consumptions will be from Biomass.
Technology offers the solution to make it more efficient and effective. For example, toll road problems
that passed the natural forest could be solved with technology (elevated toll road).
Most of the spatial plans are finised and ready to be used. It is advised to follow the rules and the plans
created in order to prevent the sanction. It needs more active approach in the formulation of the spatial
plans with contribution from the private sectors, to catch the need of companies along with the help of
Chamber of Commerce.
How Can We Make 35.000 Megawatt ‘Green’?
Electricity with the amount of 10.000 megawatt will be delivering by PLN. Its main purpose
is to provide green electricity in Indonesia called as the ‘Green Line’.
Mr. Taufik from ConocoPhillips Indonesia stated that there is a global trend in power generation.
Natural gas and renewable source of energy are projected to have the greatest percentage growth in
energy source for global electricity. Natural gas is one of the fittest options for land uses in Indonesia. It
uses less water and produce less C02 emission. The company focuses in upstream timeline and process:
from discovery to delivery. However, there is a vital problem for the licensing processes of gas permit,
exploration and production in Indonesia, mainly in the government side (bureucracy) that takes up to 15
years to complete all the processes.
Mr. David from Adaro Energy said that Coal mining is one of the
potential energy sources, especially for the midterm
plan. Resilient business model is needed to create sustainable
value, which consist and linked to many things such as mining
asset, mining service, logistic, infrastructure, power, etc. Strategy
is centered on improving control and efficiency of the supply
chain. In the example of another country, such as China, they use coal as one of the most viable sources
of energy for electricity. The new innovation of Coal that has been developed is called as the
‘Envirocoal’. It has the lowest ash content among all the Coal mined in the in the whole world, which
happens to be located in Indonesia. Another clean Coal technology that has been developed is located in
Isogo, Japan.
Ms. Chyntia from Indonesia Infrastructure Guarantee Funds (IIGF) mentions that her company
supports the electricity plants of Indonesia. The drive is still on National Electrical Company (PLN) where
they have most influenced decision for the operational aspect. It also has concern on vital issues such as
environment and social. As the name suggest, the company main purpose is to guarantee the
infrastructure projects. It aims to enhance the contribution to environmental sustainability with the final
goal is to be able to provide 35.000 megawatt, both by Coal and non-Coal energy sources.
IIGF based its criteria on following documents and information establishment, ownership, legal basis,
and mandate. Capital is not an issue, because the government provide the aid for it.
Guarantee Structure
The structure for guaranting a project is by:
1. Improving credit worthiness of Public Private Partnership (PPP) projects, by managing the
provision of government guarantee to improve credit worthiness of infrastructure PPP projects;
2. Risk advisory to government, by providing advice to the government on risk allocation and
mitigation in infrastructure PPP projects;
3. Capacity building by the IIGF institute is by contribution to support the betterment of
Indonesia’s infrastructure sector through workshops, capacity buildings and research.
Risks that have taken by public sector must be viable to be guaranteed along with the final binding and
arbitration closure. It concern on environment issue and perspective, which leads to the green
infrastructure. The company incorporates environmental risk mitigation in the heart of its operation.
Mr. Fumio from Toshiba remark the overview of Indonesia’s electricity. To catch up the vigorous growth
of demand, development of power supply resource is an urgent issue. What is required now is to
increase the electric capacity to 35 Gig watts. Coal power plant is expected to exceed half of the total
demand for following reasons: Rich Coal resources in Indonesia, Oil that exported to another countries,
etc. In the term of Coal efficiency, Japan has the highest rate while India has the lowest. As for the
recent technological trend in Indonesia, sub-critical power plants have been dominant. Sub-Critical
needs 6,747 calories while Ultra Super Critical needs 5,783 calories and Advance Ultra Super Critical
needs 5,280 calories. The recent Indonesia’s energy trend is to shift its main source of energy from Oil to
Coal and accelerating the utilization of renewable energy. Toshiba energy solution line ups are Hydro,
Geothermal, Wind, C02 capture, Mega Solar, Smart Grid, T&D, Thermal and Nuclear.
Government stated the importance and obligation to follow the environmental law (Amdal) to support
the green economy. Everyone in each company needs to fulfill and comply the government
environmental guidelines. Risk regulation perspective must come to the framework and to be put in
place for the system of monitoring. There are clean Coal technologies nowadays and one of the most
optimum environments friendly is the Ultra Super Critical technology.
The forecasting of energy in 2025 is mainly on Coal and Gas. Economy growth makes energy demanding
higher and if we try to minimize the initial cost, there will be the disaster, because of the quality will not
be high enough. One of the vital aspects is the affordability. The main purpose of guarantee is to
support the project, that not only in technology, but also in other aspect of planning. It must and need
to be a good competition that require well structure and well documented project.
The Indonesia’s Transportation Society questioning on why the green technology is still expensive. The
answer is because most of the resources come from imports. They put us as consumer and it is very
important to know on how the government supports our technological research.
For the requirement of the local content, the Ministry of Trade and the Ministry of Industry regulate the
policy for it. However, we need to see the reality if we have the capacity for it or not. The criteria of
green and Low carbon should be followed by the trajectory development.
The most important subject is the government as the process owner. Indonesia still has potential to
many additional gas exploration and production. We can search for benchmark and copy on other
country for the exploration and production, as well as accelerate the time needed for the processes. The
pricing aspect is still need the support from the government with the market price of gas and incentives
for the exploration. The future era will be the energy based on LNG and government should take active
roles to build the infrastructures.
Green Solution in ICT and Transport
For this topic, we need to have our perspective in the climate change issue. Danang Parikesit,
Chairman of Indonesian Transport Society said that for the emission reduction agenda, we need to
focus on transport policy. The forecast of transportation is that private modes will dominate passenger
travel while the Freight transport will heavily dominated by trucks. It is well known that land transport
dominates the C02 emission in Indonesia. For the developing country with good economic growth, there
is a theory in which the higher their income, the more the people will travel (for leisure or for business).
Trucks travel less than busses and most of the time they travel empty. Approximately 10% of trucks are
going on and out with containers everyday in Tanjung Priok Port.
Improving mobility consists of three basic policies. The first one is avoid policies (reduce unnecessary
transport volume). Reducing un-necessary travel requires substitute and behavioral change which is
from physical mobility to virtual mobility. It leads to advancement in telecommunication, bandwidth and
data interchange for about 30-40% in estimation. The second one is Shift policies (encourage eco-
friendly transport mode). Shifting to more energy efficient travel leads to changes in industry standard
and incentives which have impacts for better fuel, better engine and better end-of-pipe emission
capture for about 20-30% in estimation. The third one is Improve policies (eco-friendly technology
introduction). Improving the infrastructure and mobility assistance leads to incentive for innovation that
makes better infrastructure, operation system and better traffic management for up to 20%. Higher
improvement possibility in urban area shows that Indonesian cities authorities implement the ‘wrong’
policy.
Mr. Rudiantara as the Minister of Communication stated about the challenges that we need to face.
One of its solutions is to change our mindset. The current global trend for telecommunication is
broadband with the nature of using battery for its source of power. However, it has an issue with carbon
emission on device since we need to charge the battery on conventional power sources. The more
power consumption, the more emission will be produced. Fortunately, 4G technology makes the carbon
emission become less than the previous technology. However, if there are many applications on your
phone, more battery consumption will be needed.
The plan for the 4G LTE Roadmap in Indonesia is divided by several steps. The first step was in December
2014 and followed by another steps up until 2019. By the end of this year, Indonesia will be fully
covered by 4G. How can ICT - broadband help emissions reduction in other sectors, could be proven by
several things such as:
1. Power (Demand Management, Time-of-day Pricing, Virtual Power Plant);
2. Transportation (Video Conferencing, Telework, Intelligent Traffic Management);
3. Agriculture and Land Use (Smart Water, Smart Farming, Livestock Management);
4. Buildings (Building Management System, Voltage Optimization);
5. Manufacturing (Optimization of Variable-Speed, Motor System, Automation of Industrial
Processes);
6. Service and Consumer (Telemetering, e-Commerce, Online Media, Public Safety / Disaster
Management).
The Ministry of Industry explained about the green transportation and ICT industries development in
Indonesia. Green industry is placed as one of the national goal with the priority of efficiency and
effectivity. There is roadmap of national automotive industry from 2010 until 2025. One of the previous
policies in order to support the green economy, even though it is quite controversial is the Low Cost and
Green Car (LCGC). Based on the point of view from the Ministry of Industry, the LCGC could help the
boost of Indonesia’s economy in industrial sector, while some of the production could be used as export
products. One of the main concerns is that import of ICT is much higher than export.
Mr. Handry Satriago from General Electric informed that during the new era, in a new industrial world,
we own lots of big data required and the abilities to solve problems in green items. The advancing of
technologies nowadays is helping us to fulfill many needs. One of it is to reduce the amount of physical
activities needed and it also includes the reduction of transportation because all of the information
could be shared instantly and directly via internet, telephone, etc. It changes our mindset so much that
it needs to transform and modify the government policy and the future planning.
For further assistance & consultation, kindly contact:
Muhammad Ikhlas Modjo
P: +62 815 8200 890
Doddy Oktavianus Iskandar
P: +62 813 1835 9197
Dian Oktaviani
P: +62 816 184 7683
Disclaimer : this content is for general information purposes only, and should not be used as a substitute for
consultation with profesional advisors
www.mimconsulting.co.id
Wisma Kodel - 11th floor
Jl. HR Rasuna Said Kav. B-4
Jakarta Selatan 12920
T: +62 21 5290 2028
F : +62 21 5290 2027
