Law and Regulations

Indonesia has been warned it may not fully benefit from its recent investment grade status to draw significant offshore funding if it fails to impress investors looking for environmentally sustainable investments. Two international rating agencies have in the past month granted Southeast Asia’s largest economy investment-grade status, improving its chances of attracting long-term foreign funds.

Data from Towers Watson and UNPRI’s Web site show that big funds include Norway’s Government Pension Fund Global, the world’s second-largest sovereign fund with more than $550 billion in assets, and South Korea’s National Pension, the world’s third largest with around $290 billion.

Indonesia, with its $706 billion economy, is fast becoming a magnet for foreign investors as its growth continues amid a global crisis marked by European debt and the US economic slowdown. Indonesia’s prudent fiscal and monetary position, coupled with its demographic bonus, a productive population that outnumbers its unproductive one, provides a foundation for accelerating growth over the next decade.

As part of APEC’s efforts to encourage good regulatory practices, the Regulatory Reform, Case Studies on Green Investments project will develop case studies on the regulatory policies of three APEC-Industrialized (Australia, Japan, and the United States (US)) and three APEC-developing economies (Indonesia, the Philippines, and Thailand) with regard to their experiences in formulating and implementing policies to improve energy efficiency (EE) in some sectors (buildings, household appliances, transportation) and promote certain renewable energy (RE) technologies (biofuels, geothermal, solar photovoltaics (PVs)). Each of the cases will be assessed based on key criteria that determine two fundamental attributes necessary for any successful regulatory intervention: economic efficiency and effectiveness (which includes cost-benefit analysis (CBA), scientific integrity and flexibility), and administrative and political viability (which includes transparency and alignment).

 

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