OJK, Govt Introduce Roadmap for Sustainable Finance

 
Robert Sidauruk, Fathan Qorib
 
Following the signing of the Memorandum of Understanding on green banking last May, the Financial Services Authority (OJK) continues to strengthen its cooperation with the Ministry of Environment and Forestry to realize an eco-friendly financial services industry. Part of this cooperation includes a Roadmap for Sustainable Finance (“Roadmap”). Issued by both institutions, the Roadmap aims to encourage financial service providers to implement eco-friendly financing programs.
 
The Roadmap provides guidelines on how to support sustainable financing for government programs and at the same time increase competition for such financing programs between financial institutions. A salient feature of the Roadmap is that financial service providers will be incentivized to channel financing into eco-friendly projects.
 
“For example, financial service providers may increase the portion of financing for eco-friendly projects,” explained Muliaman D Hadad, OJK’s Chairman of the Board of Commissioners, in Jakarta last Friday.
 
Further, Mr. Hadad also explained that the Roadmap provides incentives for financial service providers that commit to realizing a sustainable financial program. As an example, in 2015–2016 prudential incentives on risk-weighted assets will be provided to financial service providers that satisfy certain requirements on risk mitigation. In addition, tax holidays and tariff concessions are being considered for between 2016–2018.
 
Responding to the Roadmap, Siti Nurbaya, Minister of Environment and Forestry said she hopes it will provide a solution to address some of the current environmental issues at both national and international levels.
 
“Not only will it overcome issues on environmental matters, the sustainable financing program will also accelerate competitiveness at the level of each financial service provider,” the Minister added.
 
The Minister, however, added a note of caution that to successfully realize a financial services industry that truly puts emphasis on environmental issues, comprehensive efforts are needed not only by banks but also non-bank financial institutions. Consequently, all forms of financial service providers will need to have their own program for financing eco-friendly projects.
 
“Besides banks, non-bank financial service providers are also encouraged to form their own ‘green banking’ programs,” concluded the Minister.
 
(hot/kc)