Indonesia’s economic development: Contributing to a sustainable growth pattern

February 13, 2013
Dominic Elson
“It would not make sense to undertake a development path that may impose costs on the economy and inhibit progress towards the goals of advancing human welfare. If mitigation of carbon emissions costs jobs and growth, then it may be too high a price to pay. However, it is likely that many of the necessary changes yield more benefits than costs.

Seventythree was involved in the Wilton Park meeting in Jakarta in September 2012, which was also attended by HE Dr RM Marty M Natalegawa, Minister of Foreign Affairs, Republic of Indonesia. The summary report was written by Dominic Elson and is available for download from the Wilton Park site.

Key issues discussed at the conference included:

  • The importance of the recognition by the Government of Indonesia that fair and equal access to resources is part of the sustainable use of those resources;
  • Transformation of the energy system is inevitable; while this may appear costly initially, there is longer term benefit and investment in energy infrastructure represents a huge opportunity;
  • Governance issues are crucial and there is a disconnect between central and local government; local ownership and community-based management is required to ensure resilient local livelihoods and sustainable development;
  • Building rural economies through establishing clusters, co-locating generation of renewable energy with businesses needing to use it and integrating landscape planning, can be effective for stimulating sustainable growth with equity
  • Investment should be directed, or re-directed, to promote low carbon development, and to help Indonesia move higher up the value chain;
    Coordination, monitoring and evaluation of policies is crucial, while a proliferation of targets can lead to gridlock;
  • Education and training will equip the next generation to make the most of green growth, whilst behaviour change is needed to transform mindsets about energy use and waste;
  • Subsidies need to be tackled, so they are switched from rewarding fossil fuel consumption and towards supporting low carbon alternatives;
    Fiscal incentives, including taxation policy, are important to create the conditions for green growth to thrive.
Download report