Executive Director of IFC Philippe Le Houreou said on Wednesday (1/08) that this investment initiative is an important milestone for the domestic green bonds market issued by bankings. IFC will discuss with other banks and private sectors to issue the green bonds.
This green bonds has five-year tenor and will be alternative financing for environmentally friendly projects. This instrument is expected to help the government to achieve gas emission reduction by 29 percent by 2030.
The World Bank estimated Indonesia has big opportunities for green market reaches US$274 billion until 2030. The country needs to put more attention to the green bonds as the climate change is predicted to burden Indonesia’s economy up to 2.5-7 percent of GDP by the end of this century.
IFC’s East Asia and Pacific Regional Director Viviek Pathak said IFC targets to disburse investment in green bonds up to US$1.2 billion for the Asian region until next year.
Previously, IFC has also issued green bonds in the Southeast Asian countries such as US$ 90 million in the Philippines and US$60 million in Thailand. IFC has disbursed over US$23 billion in long-term investment in the developing countries especially for enhancing private sector programs.
PT Sarana Multi Infrastruktur (SMI), an Indonesian state-owned enterprise earlier issued the first green bond in Indonesia worth of Rp500 billion (US$35.00 million) on July 10, 2018. The unit of the Ministry of Finance (MoF) has a plan to issue green bonds as much as of Rp3 trillion within a few years.
The world green market grew rapidly in recent years with reaching a record of US$155 billion in 2017, according to Moody’s Rating Services. Climate Bonds Initiative projected green bonds will reach US$250 billion this year.
Chinese and Indian companies are the leading in the green market in Asia together with Poland and France in the world’s green market.
CEO of Climate Bonds Initiative Sean Kidney earlier said Indonesia has a huge pipeline in green investment to finance eco-friendly projects such as water infrastructure, green building, energy-efficient building, and giant sea wall.