Posted on 10 Jun 2015
Sri Mulyani: Indonesian Economy Needs a Green Growth Model
Although recently having slowed, Indonesia has experienced solid
economic growth over the past ten years, with the country’s gross
domestic product (GDP) almost doubling between 2001 and 2012. However,
robust economic growth also resulted in significant environmental
degradation and accelerated depletion of Indonesia’s natural resources.
Sri Mulyani Indrawati, World Bank Group Managing Director (and former
Indonesian Finance Minister), emphasized that Indonesia needs to shift
from a ‘brown’ to a ‘green’ growth model.
A green growth model would ensure sustainable growth and would
benefit everyone. Sri Mulyani uttered these words at the 2015 Indonesia
Green Infrastructure Summit, held in Jakarta on 9-10 June. The summit,
hosted by Indonesia’s Chamber of Commerce (Kadin Indonesia) and
supported by the World Bank Group, showcased Indonesia’s efforts to
develop the ‘green’ growth model – strengthening the partnership of the
government and private sector - as part of the medium term development
plan which runs until 2019 (and is followed by the new medium term
development plan).
A brown growth model - dependent on fossil fuels, extractive
industries, and fast depletion of the country’s natural resources -
leads to increased vulnerability to climate change as well as poverty in
those areas impacted by brown growth.
Indonesia’s poverty rate has halved since the year 2000, to 11.0
percent in 2014. However, research shows that those people living in
environmentally-degraded areas suffer from higher poverty rates and are
plagued by a higher risk to fall into poverty as they are vulnerable to
shocks, including environmental shocks and lack resilience to natural
disasters. ‘Brown’ growth has caused flooding in urban regions, forest
fires, in rural regions, overfishing as well as coastal ecosystem
degradation.
By continuing to rely on ‘brown’ (unsustainable) growth, Indonesia
will become more and more constrained by limited opportunities and is
set to face economic stagnation. The ‘green’ growth model, on the
contrary, brings benefits for many decades to come. Sri Mulyani
emphasized that developing countries can take the lead in leapfrogging
from brown to green growth. Moreover, poverty eradication need inclusive
and environmentally sustainable growth.
Transformation to the ‘green’ growth model also entails challenges.
These challenges include the need for large financing, right policies,
good governance.
As Indonesia still requires huge infrastructure and property
development, there remain ample opportunities for ‘green’ development.
For example, in the transportation sector Indonesia requires 2000
kilometers of additional toll-roads, over 3200 kilometers of railway, 15
airports, and 24 new ports in order to improve inter and intra
connectivity. One project that manifests the ‘green growth’ vision is
the Teluk Lamong Port, north of the Tanjung Perak Port in Surabaya (East
Java). Indonesian President Joko Widodo is set to inaugurate this port
soon. The port is the first one in Indonesia that uses a rail system for
container traffic.
