IGES CDMプログラム 途上国における人材育成支援事業

Assessing the impacts of fiscal policies in green forestry
and renewable energy sectors on poverty reduction and
job creation in Indonesia
Dr. Ambiyah Abdullah1 and Dr. Joni Jupesta2
1
Institute for Global Environmental Strategies (IGES)
2 United Nations University (UNU-IAS)
Third Annual GGKP Conference
January 29-30, 2015
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Table of contents
1. Introduction
2. Literature Review
3. Data and Methodology
4. Results
5. Conclusion & Policy Recommendation
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1. Introduction
Indonesia at the Glance
Population in 2012 (inh)
238.5 mil
GDP in 2012 (US$)
600 billion
Income per capita (US$)
Land area (km square)
2,500
1,919,440
Energy consumption (Mtoe)
1,160.6
Transportation (Mtoe)
310.62
Source: Worldbank and
Ministry of Energy
and Mineral Resources, 2014
IGES Indonesia‘s
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Where are the GHG emissions come from?
Source: State Ministry of Environment (Boer et al., 2010)
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Target GHG emissions reduction
based on NAP-GHG (Bappenas, 2011)
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2. Literature review
Three main components of green economy in Indonesia
Expected behaviors for Green Economy
LOW CARBON AND LESS
HARZARDOUS WASTE
I. Road Map of Low Carbon
(National/Regional Action Plan
on GHG emission Reduction
(RAN GRK))
SUSTAINABLE USE OF
BIOLOGICAL DIVERSITY
II. Update IBSAP
(Indonesia Biodiversity
Strategic Action Plan)
MAINTAIN NATURAL
CARRYING CAPACITY
II. Spatial Planning
(RTRWN/D) emphasizing on
environmental Carrying
Capacity
Source: Ministry of Environment and Ministry of Finance of Indonesia (2012)
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5 key sectors:
- Forestry
- Waste management
- Energy & transportation
- Agriculture
- Industry
Forestry should
account for a 87%
reduction;
Energy should
contribute about 5%
Emission
Reduction
in Indonesia
Source: Ministry of Environment (2010)
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Fiscal Policy Focus to support green economy in Indonesia
FISCAL
FINANCIAL
1. Incentives
1. Mobilization of International Climate Finance
 Biofuels
 Indonesia Climate Change Trust Fund
 Geothermal
(ICCTF)
 Transfer Fiscal for CC action at
 Indonesia Green Investment Fund (IGIF)
province/district
 Climate Investment Funds (CTF & SCF)
2. Fossil Fuel Subsidy
3. Government Guarantee
 Green Infrastructure
2. Optimization of Domestic Finance
 Banks and Insurance
 Public: APBN, APBD
 Private: CSR, Carbon Market
Source: Ministry of Environment and Ministry of Finance (2012)
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Finance sources for the green forest sector in Indonesia
PUBLIC BUDGET



Annual National Budget (Tax-Based Revenue, Forest Non-Tax Revenue)
Province Budget (Province APBD and Fiscal Balance Budget)
District Budget (Province APBD and Fiscal Balance Budget)
PRIVATE INVESTMENT


National Investment
Foreign Investment
OVERSEAS DEVELOPMENT PARTNERSHIPS



Bilateral and Multilateral
FCPF, IFP, GEF, ICCTF, FIP, etc.
REDD+ Readiness Investment, Forest Fire, Bio Diversity, Community Development,
Institutional Capacity Building, etc.
Source: United Nations (2010)
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Incentive schemes and regulations for renewable energy
INCENTIVE SCHEME
RELATED
REGULATIONS
REMARKS
Financial Incentives
Indonesia Infrastructure
Guarantee Fund
MoF Regulation 260/2010
The Geothermal Fund
MoF Regulation 3/2012
Development Credits for
Biofuels and Plantation
Revitalization
MoF Regulation 117/2006 MoF
Regulation 79/2007
Low-cost loans for farmers and farmer groups that plant energy crops.
Government Financial
Guarantee
MoF Regulation139/2011
Government guarantee for geothermal and hydro power plant projects as part of
FTP II of electricity development.
Import Duty and VAT
exemption
Income Tax Reduction
The Geothermal Fund
Provides finance for exploration only to be paid for if sites prove productive.
MoF Regulation No. 21/2010
MoF Regulation No. 21/2010
Fiscal Incentives
Import duty Exemption on machinery and capital development of power plants.
Exemption from VAT on importation of taxable goods.
Reduction and various facilities for income tax on energy development projects,
including net income reduction, accelerated depreciation, dividends reduced for
foreign investors and compensation for losses.
Provision of Goods or Services Below Market Value
MoF Regulation 3/2012
Survey and exploration services, only to be paid for if sites prove productive.
Guarantee on Business
Viability of PLN
Public Competitive Bidding
MoF Regulation 139/2011
Feed in Tariffs
MEMR Regulation 4/2012
MEMR Regulation 22/2012
MEMR Regulation 32/2008
Mandatory Utilization
SOE providing Guarantee to attract private capital investment in infrastructure
development.
MEMR Regulation 1/2006
Guarantee that PLN would perform its business activities and respect contracts
with IPP.
Agrees favorable tariffs with most competitive company bidding for tender.
FIT for biomass and mini hydro power plant. FIT for Geothermal power plants.
Obligatory usage of biofuels for fuel mix. Mandatory usage of biofuels in mining
industry.
I (Source: Damuri and Atje, 2013)
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3. Data and Methodology
The 2005 Indonesian Inter-Regional
Social Accounting Matrix (IRSAM)
The 2013 ILO classifications and
disaggregation ratios of green sectors
1. It consists of five main regions;
1. To construct green sectors extended
Sumatera, Java, Kalimantan,
Sulawesi & Eastern of Indonesia.
2. It is sufficient to discover the
detailed
classifications
of
regions, labor, and household
incomes.
It
has
sixteen
categories of labour.
IGES | http://www.iges.or.jp
2005 Indonesian IRSAM table.
2. To assess the impacts of fiscal
policies spent by Indonesian
government on green forestry,
renewable energy and green oil
palm, this study uses 10% increase
of local government budget spent
on green forestry, renewable energy
and green oil palm in five regions.
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Disaggregation ratios for Parent sectors and green sectors
ILO (2013) classified the green sectors in Indonesia into 14 green sectors (6 green
sectors are presented as follows).
No
Parent sectors
1
Paddy
2
Other food crops
3
Estate crops
4
Forestry
5
Fishery
6
Oil palm
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Green sectors
Brown paddy
Green paddy
Brown food crops
Green other food crops
Brown estate crops
Green estate crops
Brown forestry
Green forestry
Brown fishery
Green fishery
Brown oil palm
Green oil palm
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Disaggregation ratios
0.94
0.06
0.94
0.06
0.94
0.06
0.82
0.18
0.82
0.18
0.91
0.09
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4. Results
Macro backward linkage result in Java and Bali region
JAVA AND BALI
Types of Backward Linkage
Total Backward Linkage
Backward linkage Java and
Bali-Sumatera
Non
Labor laborcapital
7.10
3.85
9%
8%
Non
Household Household
Production
laborCompanies
rural
urban
sector
land
4.41
6.32
5.89
1.69
5.89
9%
11%
10%
7%
10%
Backward linkage Java and
Bali-Java and Bali
85%
87%
86%
81%
83%
90%
83%
Backward linkage Java and
Bali-Kalimantan
4%
3%
3%
5%
4%
2%
5%
Backward linkage Java and
Bali -Sulawesi
1%
1%
1%
1%
1%
0%
1%
Backward linkage Java &
Bali-Eastern of Indonesia
1%
1%
1%
1%
1%
0%
2%
Source: Authors’ calculation
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Top ten strongest backward linkage in domestic
intermediate transaction in the Sumatera Region
No
Production sector
Backward linkage
1
Green oil palm
2.96
2
Green food and drink processing
2.67
3
Hotel and Restaurant
2.51
4
Fish Processing
2.46
5
Green renewable energy
2.42
6
Green rattan and bamboo Manufacturing
2.35
7
Conventional wood processing
2.35
8
Pulp and Paper
2.33
9
Green livestock
2.32
10
Green other food crops
2.29
Source: Authors’ calculation
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Summary results in each region due to 10% increase of local
government budget spent for green forestry, green oil palm
and green renewable energy sectors
Sumatera
Java and
Bali
Kalimantan
Sulawesi
Eastern
Indonesia
Labor
13%
13%
8%
13%
14%
Non labor-capital
15%
13%
23%
13%
13%
Non labor-land
1%
0%
1%
1%
1%
Household rural
7%
8%
4%
7%
7%
Household urban
11%
12%
7%
13%
12%
Companies
3%
4%
6%
7%
12%
Total output
50%
51%
52%
46%
42%
Total changes in
each region
21%
61%
8%
6%
4%
Account
Source: Authors’ calculation
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5. 1 Conclusion
• The Java and Bali region has the strongest backward linkage with other
regions such as Sumatera, Kalimantan, Sulawesi and Eastern Indonesia.
This indicates that the Java and Bali region plays an important role as
supplier to other regions. The policies implemented in the Java and Bali
region will strongly impact other regions.
• It is found that green sectors have strongest backward linkages in the
economy. It indicates that investment or fiscal policies implemented in
the green sectors in Indonesia will have positive impacts on the
economy.
• The simulation scenario on fiscal policy on green forestry, green oil
palm and green renewable energy sectors (a 10% increase in local
government spending on those selected sectors in each region) has
positive impacts on labor, household income, and output.
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5.2 Policy recommendation
• Indonesian government should strengthen the role of other regions
outside Java and Bali to support the implementation of fiscal policies
and transition into green economy successfully.
• There is a need to carefully re-design and evaluating on how the local
government spending structure in each region in Indonesia can support
the investment of green sectors in Indonesia.
• To enhance the positive impacts of fiscal policies in green sectors on
poverty reduction and job creation, the policy instrument or mechanism
is necessary in order to redistribute the positive impact fairly among the
regions in Indonesia.
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Thank you for your attention.
[email protected];
[email protected]
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