UK’s Development Finance Institution to Foster Green Investments in Indonesia

Aug 2023

The Indonesia Investment Authority (INA), Indonesia’s sovereign wealth fund, and British International Investment (BII), the UK’s development finance institution (DFI) and impact investor announced a strategic partnership aimed at fostering sustainable economic development and cooperation. The partnership, formalized by signing an Investment Framework Agreement (IFA) between the two entities, will focus primarily on green infrastructure, renewable energy, climate resilience and adaptation, and related areas.

The partnership underlines the synergy between INA’s dedication and BII’s investment focus to mobilize capital and catalyze select green sectors in Indonesia to achieve development objectives on improved productivity, sustainability and inclusion. Through this IFA, the parties intend to facilitate an environment for investments and partnerships in private sector businesses in Indonesia. Leveraging their combined strengths, experience, networks and a shared vision, the partnership is poised not only to seek optimal risk-adjusted returns on invested capital, but also to cultivate sustainable economic growth and address global climate challenges.

INA has designated green energy and transformation as one of its priority investment sectors. Earlier in 2023, INA made its first strategic investment in green energy through PT Pertamina Geothermal Energy (PGE), the largest geothermal energy company in Indonesia. Additionally, INA joined forces with Contemporary Amperex Technology Co., Limited (CATL) to establish a Green Electric Vehicle (EV) Fund that will concentrate on end-to-end EV value chain investment, primarily in Indonesia, reflecting INA’s dedication to support Indonesia’s sustainability and commitment to net zero carbon emissions by 2060.

In synergy, BII with its 75 years’ experience of investing in emerging economies, is committed to boosting climate finance in the region. As part of its 2022-2026 investment strategy, BII re-entered Southeast Asia including Indonesia with plans to invest up to GBP 500 million (USD 638 million) across the capital structure to support the region’s green energy transition. This commitment was recently demonstrated through BII’s USD 15 million investment to the SUSI Asia Energy Transition Fund (SAETF), a Southeast Asia-focused energy transition infrastructure fund. In Indonesia, the Fund has invested in the development of run-of-river hydropower and wind projects via a joint venture between SAETF and regional developer Pacific Impact. This reiterates the DFI’s renewed commitment to investing in climate finance in Indonesia, as one of BII’s priority markets in Southeast Asia.

(Source: British International Investment)

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