Indonesia

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.

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.

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.

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.

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.