CEO Climate Bonds Initiative Sean Kidney - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) –  The Indonesia Stock Exchange (IDX) early this week made a bold step by joining the Climate Bonds Initiative Partner Program, the sixth stock exchange to partner with the Climate Bonds. This signals seriousness of the exchange management to develop green bond market in Indonesia.

In order to find out how big is the prospect of green bonds in Indonesia, The Insider Stories interviewed Sean Kidney, CEO of Climate Bonds Initiative, recently. Following is the excerpt:

Q: How do you see Indonesia’s response to green bond?
A: National pension fund or the government pension fund has said it allocates 10 percent of its assets to ESG (Environmental, Social and Government) investment, including green bond. In the last six months, they are making big shift. They are very keen in grabbing this market. They are looking for places to invest.
Q: How much is the total global green bond portfolio last year?
A: Last year, we have nothing. We just started this year. Globally, the market size for green bond is US$155 billion last year and this year we predict US$250 billion.
Q: How big is the green investment opportunity in Indonesia? 
A: Indonesia has huge pipeline in green investment. For example, potential investment in railway in Java, which is massive. The water infrastructure investment can also be developed. Green building and energy efficient building in big cities can be funded by green bonds, climate resilient investment. Developing giant sea wall can also be funded by green bond. So it is a massive (opportunity).
Q: Are there any Indonesian companies interested in the scheme?
A: Yes, there are a lot. The Indonesian government is at the moment marketing the first ever Indonesian green sukuk. It could be bigger than US$4 billion. So, the market is there.
Q: What’s about investor’s perspective right now for Indonesia?
A: Indonesia just has been upgraded to Investment Grade globally. So this is incredibly important, because it makes much easier for Japanese and European investors to invest in Indonesia. So we expect fund inflows to increase.
Q: How is your relation with and EBA Indonesia?
A: We are an NGO. We sign an agreement with EBA Indonesia and PINA (Non-State Budget-Funded Investment) today (05/02) and Bappenas as well, to promote Indonesian growing investment in infrastructure.
Q: Could the green bond issuance be happened in the first quarter?
A: The Indonesian green sukuk will be up very quickly. But I think the other one will take longer to come through.