UOB Indonesia: Green economy transition will be key to Indonesia’s long-term sustainable growth

Jakarta, 29 September 2022 – UOB Indonesia anticipates that integrating green growth into its national development strategy will be key to Indonesia’s long-term sustainable growth. This would help to boost consumer spending and support the nation’s strategy of industry downstreaming. The bank forecasts Indonesia’s gross domestic product (GDP) to grow to 4.8 percent in 2022 and five per cent in 2023 amid the ongoing global economic uncertainty.

The Bank’s optimism on the nation’s economic growth was shared at its annual UOB Indonesia Economic Outlook conference held today in Jakarta. This year’s theme was “Emerging Stronger in Unity and Sustainably”. His Excellency Mr Joko Widodo, President of the Republic of Indonesia, opened the event with special remarks. Ms Sri Mulyani, Minister of Finance of the Republic of Indonesia, also attended the event and gave a keynote speech. More than 3,000 participants attended the annual UOB event.

Mr Hendra Gunawan, President Director, UOB Indonesia, said, “In the midst of challenges and global uncertainties, we appreciate President Mr Joko Widodo's leadership in navigating the post-pandemic economic recovery. The Indonesian economy has proven to be resilient through the synergy of government's macroeconomic policies that have succeeded in bringing our country to a fast and sustainable recovery. As we play our role as a catalyst and enabler, we look forward to supporting the government, regulators, investors and communities in building a sustainable future.”

Indonesia has been making steady progress towards a stronger economic recovery, after its GDP contracted by 2 per cent during the pandemic in 2020. However, the country is facing risks such as slower global growth, global financial volatility, tighter macroeconomic policy and rising geopolitical tensions. Nevertheless, UOB Indonesia expects Indonesia’s economy to remain resilient in 2023, supported by the nation’s robust consumption and commodity export boom

Mr Enrico Tanuwidjaja, UOB Economist, said, “Climate change is the most pressing concern that the world, including Indonesia, is facing. Meanwhile, globally, we are faced with challenges related to energy demand, food scarcity and global health issues. The developing and emerging economies have also been working closely to adopt low-carbon and climate resilient policies. Indonesia must continue to support sustainability and further manage its spending and investments to ensure a resilient recovery.”

According to the Asian Development Bank, the energy demand in Asia is set to double by 20301 . Today, Indonesia still heavily relies on coal-fired power plants (CFPP) that make up 67 per cent of Indonesia’s energy generation mix. Nevertheless, the trend might slow down as the government has formally banned the new development of CFPP and prioritised the development of power plants that utilise renewable sources of energy. The green energy provisioning is crucial as it has a highly positive correlation with growth. The policy will also support the country’s commitment to reduce emissions by 29 per cent in 2030 and achieve net-zero emissions by 2060.

“To emerge stronger, we need to work together to tackle the challenges of climate change and the energy crisis. We hope that through Indonesia’s G20 Presidency this year, nations around the world will leverage their strengths and expertise to promote a green economy,” said Mr Tanuwidjaja.