Indonesia gears up in implementing environment-friendly financial system

Indonesia took one step in implementing environment-friendly financial system with the signing of an Memorandum of Understanding (MoU) between the Indonesian environment ministry and the Financial Service Authority (OJK) on Monday, paving the way for the OJK to do so.

The MoU was signed by Indonesian Environment Minister Balthazar Kambuaya and OJK Commissioner Board Chairman Muliaman Hadad, aimed at improving OJK's role in protecting and managing the environment through developing a sustainable financial service system. "As a new instution that regulates the nation's bank and non- bank services, the OJK has a strategic role in regulating the economy through loan channeling and financing policies that address the environment and encourages the creation of environment- derive in non-bank financial service entities such as stock trading, insurance and other financial services," Balthazar said in his remarks in the signing ceremony.

The MoU signing materializes the program initiated by the ministry and the central bank since 2010 called green banking program. The green banking was intended to alter paradigm of greedy economy regime to green economy in national development process.

The greedy economy is defined as focusing the economy merely on growth assessed through Gross Domestic Product (GDP) increase, excessive natural resource exploitation and economic activities financed by loans.

Meanwhile, the Green Economy is a new paradigm in carrying out economy activities based on 3Ps (People, Profit, Planet) balance, efforts to protect and manage the nature and engagement of public participation.

The 3Ps balance principle has been adopted in sustainable development drive. The principle is expected both as propeller in maximizing profit and active tool in preserving the nature and promote social care drive among the society.

Through the MoU, the OJK is highly expected to attract banks and non-banks institutions in providing more financing for environmental green projects such as renewable energy, green industry, organic farming and eco-tourism.

The OJK is an institution particularly assigned to regulate and supervise the operation of banks and non-banks institutions which used to be conducted by the central bank.

The OJK commenced its service in early 2013.