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Indonesia’s tropical and archipelagic landscape makes it one of the world’s 17 megadiverse countries. It has one of the largest tropical forests in existence, as well as extremely rich coastal and marine ecosystems. Its fertile land and its resource endowments make it one of the largest producers and exporters of minerals, energy resources, timber and agricultural products. Indonesia’s economic and social development since the 1997‑98 Asian financial crisis has been impressive, with millions of people lifted out of poverty.
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The OECD Green Growth Policy Review (GGPR) was initiated in 2015 by Siti Nurbaya Bakar, Minister of Environment and Forestry of Indonesia, and Simon Upton, then the OECD Environment Director. The GGPR is one of the main activities in the OECD‑Indonesia Work Programme 2017‑18, launched in 2016 by Minister of Finance Sri Mulyani and OECD Secretary‑General Angel Gurría. As the first of its kind, the report aims to review Indonesia’s policy framework for green growth and provide recommendations to help the country move towards a green and sustainable economy.
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Indonesia is the world’s fourth most populated country and largest archipelagic one. Economic growth has averaged more than 5% per year since the 1997‑98 Asian financial crisis, raising per capita income and reducing poverty. Natural resources have been a pillar of this growth, accounting for 20% of GDP and 50% of exports in 2017. Yet strong economic development, population growth and rising living standards have increased demand for land, energy and other resources, as well as pressures on the environment.
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The assessment and recommendations present the main findings of the OECD Green Growth Review of Indonesia and identify 49 recommendations to help Indonesia make further progress towards greening its economy. The OECD Working Party on Environmental Performance reviewed and approved the assessment and recommendations at its meeting on 12 February 2019.
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This chapter provides a snapshot of key environmental trends in Indonesia, highlighting some of the main achievements, remaining challenges and key policy responses. Beginning with an overview of the main socio-economic developments, the chapter presents Indonesia’s progress in moving towards i) an energy-efficient and low‑carbon economy; ii) sustainable waste management and resource efficiency; and iii) sustainable management of its natural capital, such as biodiversity, forests and water resources.
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This chapter discusses Indonesia’s progress in greening its economy on the path to sustainable development. It examines the policy and institutional framework for sustainable growth, then reviews the use of tax policy to pursue environmental objectives and progress in removing subsidies that can encourage environmentally harmful activities. The chapter also analyses public and private investment in environment-related infrastructure, such as that for water and sanitation, waste, energy and transport, and reviews promotion of environmental technology and green innovation as a source of economic growth and jobs. The role of development co‑operation is also discussed.
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This chapter examines how Indonesia is managing its land to achieve the objectives of ecosystem protection and tackling climate change. It provides an overview of drivers and trends relating to land conversion, ecosystem services and climate change. It analyses the performance of institutional arrangements and policy tools in achieving a coherent approach to the nexus of land use, ecosystems and climate change, and explores the challenges of financing management of this nexus, supporting innovation and ensuring social inclusion.