Indonesia

Indonesia, the world’s largest archipelago, is one of the most populous countries in the world. It is an emerging power, but must nevertheless reconcile climate change with growth. AFD is supporting its low-carbon energy development, which respects its exceptional natural heritage.
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Indeso center near, Indonesia
AFD and Indonesia: Striking a balance between growth and respect for biodiversity
Indeso center near, Indonesia

Promoting renewable energy and energy efficiency

Hydropower plant in Indonesia

PROMOTING RENEWABLE ENERGY AND ENERGY EFFICIENCY

With population growth and development of the country, Indonesia’s needs in terms of generation, transmission and distribution of electricity are very high. AFD contributes to public investments in the energy sector, with a particular focus on renewable energies (geothermal, solar, hydraulic, etc.) as well as on energy efficiency (building, transport, etc.).

AFD finances renewable energy and energy efficiency projects through loans to PLN, the public electricity utility and lines of credit to local banks supporting private or public investors.

Improving urban public services

Railway line Banjar-Bandung, Indonesia

IMPROVING URBAN PUBLIC SERVICES

Urban growth in Indonesia follows economic development. With 6% GDP growth per year and 260,000 million inhabitants, the country is facing rampant urbanisation.

In facing with this challenge, AFD is supporting the development of urban public transport (buses, trams, metro…). The aim is to limit car use, thus improving air quality as well as reducing greenhouse gas emissions.

We are also financing the installation of centralised water and sanitation systems in Indonesia’s main cities, to improve living conditions of the population and to save this resource.

AFD is also helping the Indonesian government to implement sustainable urban planning by investing in public infrastructure and developing the skills of urban public service employees.

Aiming sustainable management of natural resources

Satellite for real-time oceanographic observation and analysis, Indonesia

AIMING SUSTAINABLE MANAGEMENT OF NATURAL RESOURCES

Indonesia is a country with inestimable forest and maritime resources, one of the world’s biodiversity hotspots. But illegal fishing and unplanned logging threaten the country’s ecological balance and its long-term resources.

On the maritime side, Indonesia is testing a more law-abiding fishing sector. AFD supports the fight against illegal fishing, the sustainable management of fisheries resources and the strengthening of port and logistics services. 

On the forestry side, we support projects that respect the quality of life of local communities and involve them in sustainable forest management.

AFD works with partners such as the Meteorological, Climatological and Geophysical Agency, the National Institute of Science and the Ministry of Maritime Affairs and Fisheries.

Developing a better maritime connectivity

The spatial oceanographic center to fight against illegal fishing and protect coral, Indonesia

DEVELOPING A BETTER MARITIME CONNECTIVITY

The maritime sector is a key sector for Indonesia, an archipelago of more than 17,000 islands. Yet, it faces many challenges in terms of efficiency as well as dialogue and identification of main stakeholders, for example.

AFD’s action in the field of maritime connectivity will be focused on a reform programme which is funded as public policy loans. The aim is to increase the performance of maritime and logistics sectors, clarifying relevant institutional organisation and increasing confidence of private operators. In turn, that will encourage their investments. AFD’s objective is also to establish a long-term dialogue with all stakeholders in the sector.

In addition to the connectivity issues that are essential for the economic catch-up of the islands located in the east of the country, AFD will focus on mitigating the environmental impacts of major infrastructure projects, particularly the ports.

Providing support for the effectiveness of public finances

Indeso marine center

PROVIDING SUPPORT FOR THE EFFECTIVENESS OF PUBLIC FINANCES

Indonesian authorities have initiated major public finance reforms, both to increase government revenues, and thus sustain government policy. It is also to improve the efficiency of public spending ("Collect more, Spend better"). Since 2016, AFD has supported these public finance reforms in the form of public policy loans, co-financed by the World Bank.

AFD will explore other areas such as e-government, thus demonstrating the Agency’s desire to become a digital partner. It will also address the effectiveness issue of public spending, particularly in the social sectors (education, health, social protection) and at local government level.

1.9
billion committed between 2007 and 2016
26
projects financed
51%
of financing in the energy sector

Indonesia is one of the fastest growing economies in Asia and the world’s fourth most populous country (262 million inhabitants). The country has recently established democratic institutions, which make it highly attractive to foreign investors. However, the archipelago is faced with a lack of infrastructure and a high poverty rate.

The Indonesian archipelago is located in the heart of the Indian Ocean and is made up of over 17,000 islands. With its 50,000 km of tropical coastlines and half of its surface area covered by forests, Indonesia is a biodiversity hotspot. This biodiversity is threatened by human activity and climate change. 

Indonesia has set out on the path of sustainable development, while strengthening its political and financial good governance. 

AFD has been operating in Indonesia since 2007. It was initially involved in “post-tsunami” action and today supports more inclusive and environmentally friendly growth.

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