Green economy post COVID-19: insights from Indonesia

ABSTRACT

The COVID-19 pandemic has triggered a global economic crisis, including in Indonesia, demonstrating the vulnerability of the country's economic structure. However, the crisis may offer an opportunity to “build back better” and transition to a greener economy. Using qualitative data analysis, this study aims to analyse contemporary issues on green economy implementation in Indonesia. The authors found that transitioning to a green economy has been included in the national constitution and the 2020–2024 development plan. However, the economic recovery program does little to address environmental issues, demonstrating a lack of consistency between planning and implementation despite the pandemic. The country's economy still heavily depends on extractive sectors and primary commodities that negatively affect the environment. The opportunity to strengthen the green economy, which included the infusion of a sizeable government stimulus, was not fully utilised. This study suggests several policy options to promote green-economy transition including attracting green investment to Indonesia, switching from primary to secondary and tertiary commodities, suspending incentives for the extractive sectors and coal-fired power plants, and maintaining policy and regulation consistency related to the green economy.

KEYWORDS:

• Green economy
• sustainable development
• COVID-19
• Indonesia
• economic recovery

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Pancasila is the official, foundational philosophical theory of Indonesia and is composed of five principles held to be inseparable and interrelated: belief in the Almighty God, just and civilised humanity, the unity of Indonesia, democracy guided by the deliberations between representatives, and social justice for all of Indonesia’s people.

2 A primary commodity is an unprocessed commodity, extracted directly from natural resources such as coal and crude palm oil. Meanwhile, secondary commodities are the products produced from primary commodities to meet market requirements. For example, the process of refining crude palm oil generates a range of products such as biofuel.

Additional information

Funding

This work was supported by Greenpeace Indonesia.

Notes on contributors

Berly Martawardaya

Berly Martawardaya is an economist who has earned two master’s degrees in economics from the Vrije University of Amsterdam in the Netherlands and the University of Siena in Italy. He is currently pursuing a PhD in Economics from the University of Siena in Italy. He is interested in several topics in economics, namely development economics, public sector finance, environmental economics, and behavioural economics. He is also a lecturer at the Department of Economics, University of Indonesia. He teaches several courses, such as Indonesian Economy, Research Methodology, Environmental Economics, and Natural Resources. In addition, he also teaches at the Master Program of Planning and Public Policy, University of Indonesia. Currently, he is serving as Program Director of the Institute for Development of Economics and Finance (INDEF). As an economist, he actively writes his views on the economy through national newspapers and scientific journals. His LinkedIn: https://www.linkedin.com/in/berly/.

Ari Rakatama

Dr Ari Rakatama is an Environmental and Resource Economist with more than 20 years of experience working in the field of forestry, environment, agriculture, renewable energy, clean-tech, SMEs, and sustainable development. He currently works at the Indonesian Ministry of Environment and Forestry. He is also a Researcher at the Institute for Development of Economics and Finance (INDEF), and an expert for several organisations such as the Australian Consortium for “In-Country” Indonesian Studies (ACICIS), E.Co. Ltd Group, and NIRAS-LTS International. He is experienced in providing consultancy services for prominent international organisations such as UNIDO, GIZ, GGGI, FCDO, and Greenpeace. He holds a PhD in Environmental and Resource Economics from the University of Western Australia, MSc in Environmental and Energy Management from the University of Twente (Netherlands), and BSc in Agricultural Social Economics from the University of Lampung (Indonesia). He has had published works, and acted as a reviewer, in some international reputable scientific journals such as World Development, Journal of Environmental Management, Land Use Policy, and Forest Policy and Economics. His LinkedIn: https://www.linkedin.com/in/ari-rakatama-24b1377b/.

Dhenny Yuartha Junifta

Dhenny Yuartha Junifta is a PhD scholar at the University of Indonesia. He is also a researcher at the Center of Food, Energy and Sustainable Development – Institute for Development of Economics and Finance (INDEF). He has been active in research and organisations since he was in college. Dhenny has more than five years of research experience with a focus on natural resource economics and digital innovation. Various research he has been conducted includes mainstreaming climate change issues in Indonesia, fiscal budget mapping for low carbon development in Indonesia, bridging for the new Indonesian economy (green, inclusive, and sustainable), special autonomy and resources curse in Papua and West Papua Province. Together with several NGOs, he also advocates for better climate changes policy and inclusiveness. Some of his previous positions are an assistant to the Presidential Special Staff for Economic Affairs, an expert at the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration, and a research assistant at the Center for Economic Development and Population Studies, Brawijaya University (Indonesia).

Dinda Ayu Maharani

Dinda Ayu Maharani is a research assistant at the Institute for Development of Economics. She holds a Bachelor of Economics degree from Universitas Padjadjaran. Her main research focus comprises environmental economics and development economics. She has previously assisted in research projects on the green economy, green bonds, and quality investment.