Jakarta, July 18th, 2022
B20-G20 Dialogue: Finance and Infrastructure Task Force
The B20-G20 dialogue forum organized by the B20 Indonesia Finance & Infrastructure Task Force, on a hybrid basis (14/7/2022) in Nusa Dua, Bali went smoothly and successfully. This meeting discussed policy recommendations related to finance and infrastructure which will also be discussed in the meeting of finance ministers and central bank governors of G20 countries the next day.
At the B20-G20 dialogue event, B20 Indonesia Finance & Infrastructure Task Force Chair Ridha Wirakusumah presented the policy recommendations formulated by his task force to address infrastructure and funding gaps, especially in developing countries.
"We encourage the four recommendations of the F&I Task Force to be put into concrete actions, through the collaboration of business actors and the government, to encourage sustainable economic recovery," said Ridha closing the presentation of the recommendations of the F&I Task Force.
The four recommendations that have been produced are, first, increasing access to affordable and appropriate sources of financing. Second, encourage collaboration between countries to accelerate a fair transition towards net-zero, namely the number of carbon emissions released into the atmosphere, does not exceed the number of emissions that can be absorbed by the earth.
Third, accelerate the development and adoption of digital and intelligent infrastructure and fourth, improve global financial services regulation to achieve a better balance between economic growth, productivity and stability.
Meanwhile, Chair of B20 Indonesia Shinta Kamdani when opening the B20-G20 dialogue said the imbalance between developed and developing countries in recovering from the pandemic crisis cannot be separated from financial and infrastructure problems that exist in each of these countries.
"We must encourage the main solutions formulated in the form of four recommendations at the G20 Summit so that affordable and appropriate government financing cooperation between countries, digital and smart infrastructure and most importantly, a balance between growth, productivity and stability can be realized immediately," he explained.
Shinta emphasized that the legacy of Indonesia's B20-G20 Presidency is more than just an initiative and will be sustainable. On this occasion, Shinta highlighted two potential legacy programs that support the F&I Task Force's policy recommendations to encourage collaboration between countries to accelerate economic recovery through carbon trading to reach net zero.
First, the Carbon Center of Excellence will help businesses understand and navigate carbon trading through a center for sharing knowledge and practices by enhancing business knowledge and capabilities to develop green industry-based businesses.
“We aim to increase the number of sustainable projects that can be funded through carbon trading. This is very important because it will help finance developing countries in reducing carbon emissions,” explained Shinta.
Second, the Global Climate Finance Alliance is a new multilateral alliance designed to measure and replicate innovation, technology and financial solutions including mixed financing to attract investments that are in line with climate action and achieve sustainable goals according to SDGs indicators.
"Most importantly, to strengthen relations between the business community of G20 countries, the B20 Presidency of Indonesia facilitates network interactions and explores new business opportunities for trade and investment to support the acceleration of a more equitable and inclusive global economic recovery," Shinta explained.
On the same occasion, the Chairperson of the Indonesian Chamber of Commerce and Industry Arsjad Rasjid emphasized that the four recommendations put forward by the F&I Task Force to realize a green and sustainable future must be supported and fought for, especially regarding the obstacles and obstacles that hinder it.
“The gap in infrastructure between developed and developing countries is very clear. Developing countries face challenges that have become classic problems, namely the lack of infrastructure in remote and rural areas, which makes economic growth stagnate and run slowly, "explained Arsjad.
The lack of financing for infrastructure, said Arsjad, must be addressed immediately. In Indonesia, the estimated cost of infrastructure for the 2022-2024 range is around US$445 billion. Meanwhile, the government was only able to fund about 37 percent of the total estimated cost, resulting in a budget shortfall of US$280 billion.
“To overcome these challenges, there needs to be stronger collaboration and cooperation. First, collaboration and cooperation of the international community, such as the G20 is very important to accelerate sustainable infrastructure projects," he said.
Sustainable Funding Collaboration
Arsjad encourages developed countries to assist developing countries through funding and investment in infrastructure projects and technology transfers that can have a positive impact on sustainable development and economic recovery.
Second, public-private partnership, continued Arsjad, is the key to realizing greener and smarter infrastructure development. The private sector as the main engine for economic growth and development is playing an increasingly important role in almost all major global, social and environmental changes.
He takes the example of electric vehicles that are solutions to reduce emissions and dependence on fossil fuels or digital or fintech financing innovations to encourage financial inclusion for the community. However, Arsjad asked for government support through investment-friendly policies or regulations, one of which was the Omnibus Law.
"The resulting policy recommendations will be an important and practical guide for us to realize greener and smarter infrastructure development on a large scale for a collaborative and inclusive global economic recovery," explained Arsjad.
In line with the views of Arsjad and Shinta Kamdani, Deputy Minister of Finance Suahasil Nazara as a representative of the Ministry of Finance said that infrastructure development is very important for national economic growth. For the past 7 years, President Jokowi has been very serious about building and catching up with infrastructure, especially regarding toll road access.
Suahasil said that infrastructure is closely related to the government budget. However, the limited government budget makes the role of the private sector very important to build infrastructure. As a result, said Suahasil, public-private partnerships are highly expected in accelerating infrastructure development, especially those that are inclusive and more sustainable.
“The government encourages green or sustainable financing, one of which is through green bond instruments. The government has also established the Indonesian Environmental Fund since 2018 to ensure the sustainability of green financing,” said Suahasil.
Regarding sustainable financing, Suahasil said this is also in line with the government's agenda to achieve the net zero emission target in 2060 which puts the energy transition, and green economy transition going well.
On this occasion, Deputy Chair Finance & Infrastructure Task Force/Deputy CEO of the Indonesia Investment Authority (INA) Arief Budiman also held a dialogue with the World Bank Managing Director of Development Policy and Partnerships Mari Elka Pangestu regarding sustainable financing.
According to Mari Elka, in the long term, future economic recovery, especially in developing countries, will rely on investment recovery. The incoming investment, said Mari Elka, should be used to build infrastructure. Sustainable infrastructure development is important for mitigating the climate crisis as well as accelerating economic growth.
In this dialogue forum, the Minister of Energy and Mineral Resources of the Republic of Indonesia Arifin Tasrif and BI Governor Perry Warjiyo also appreciated the steps and recommendations produced by the F&I Task Force to encourage economic recovery in finance and infrastructure, especially regarding access to inclusive sustainable financing.
Recommendations from the F&I Task Force itself were immediately discussed in two-panel sessions involving policymakers from members of the B20 and G20 forums also involving top executives of multinational companies and government representatives from each member country.
After discussing the recommendations in the panel discussion, B20 Indonesia also provides an opportunity for representatives from India who will become the B20-G20 2023 Presidency, represented by the Chief Economic Advisor to the Government of India V. Anantha Nageswaran and from the Indian business-industrial world will be represented by Members of CII National Council, Chief Executive Officer and Managing Director of L&T SN Subrahmanyan.
This event is supported by:
PT Astra International Tbk, PT Bayan Resources Tbk, PT Indika Energy Tbk, and Sinar Mas
Asian Development Bank, International Chamber of Commerce, World Bank Group