ADB's Work in Indonesia

ADB assists Indonesia’s recovery from the coronavirus disease (COVID-19) pandemic by promoting competitiveness and inclusion, supporting energy transition, enhancing climate resilience, strengthening healthcare systems, and building human capital.

To date, ADB has committed 827 public sector loans, grants, and technical assistance totaling $43.9 billion to Indonesia. Cumulative loan and grant disbursements to Indonesia amount to $36.46 billion. These were financed by regular and concessional ordinary capital resources, and other special funds. ADB’s current sovereign portfolio in Indonesia includes 21 loans worth $6.11 billion.

ADB committed $1.88 billion in 2022 mainly to accelerate Indonesia’s recovery from the COVID-19 pandemic. A $500-million loan aims to help improve the efficiency and resilience of state-owned enterprises (SOEs) and strengthen their corporate governance. Assistance was also provided to promote innovative financial inclusion through reforms that enhance access to financial services for vulnerable groups, including small and medium-sized enterprises, women, youth, and people living in rural areas.

ADB signed a memorandum of understanding in November 2022 to explore early retirement of a coal-fired power plant under the Energy Transition Mechanism (ETM)—a regional platform for unlocking public and private finance to shorten the life of legacy coal-fired power plants and expand renewable energy. ADB supports Indonesia’s ETM Country Platform, which was launched during Indonesia’s G20 presidency, and the Climate Investment Fund Accelerating Coal Transition program that aims to mobilize more than $4 billion in financing. ADB also committed a $500-million loan for energy sector reform to boost fiscal sustainability and sector governance, and expand private sector investments in clean and renewable energy.

Further assistance on green and sustainable development was provided through a $150-million loan to catalyze public and private funds to support green and bankable infrastructure projects—the first of its kind in Southeast Asia. ADB also committed $93 million to enhance shrimp farming by smallholders to boost productivity, profitability, and environmental sustainability. This is part of ADB’s wider program on food security, environmental sustainability, and climate resilience in Indonesia.

ADB supported human capital development through a $139-million loan to help commercialize research and development and improve start-up success at four science and technology parks in Indonesia. ADB also made an equity investment of $12.2 million, as part of PT Jayamas Medica Industri (OneMed)’s initial public offering, to help expand the availability of affordable medical equipment and supplies, and strengthen the resilience of the healthcare system in Indonesia.

View from a sky bar on the 56th floor at BCA Tower, overlooking downtown Jakarta, Indonesia. Photo: Gerhard Joren/ADB

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Indonesia as of 31 December 2022 was $1.22 billion representing 9.5% of ADB’s total private sector portfolio.

Operational challenges. Indonesia’s economy showed strong signs of recovery in 2022. However, a possible global economic slowdown, monetary tightening, and the continued impact of the Russian invasion of Ukraine could create uncertainty for policy makers in 2023. ADB will monitor this situation closely to deliver the necessary support.

Project processing and implementation continue to face systemic challenges surrounding project readiness, procurement process and regulations, and safeguard documents, as well as workplans and budgets. The prolonged movement restrictions related to the pandemic also impacted operations in the early part of 2022. To increase project readiness and enhance portfolio performance, ADB continues to support the Government of Indonesia through technical assistance and capacity building activities related to procurement, safeguards, gender, financial management, and other relevant areas.

Knowledge Work

ADB supported Indonesia’s G20 presidency through events and knowledge products on areas such as energy transition, food security, and gender inclusion. The Indonesia Development Talk webinar series has enabled discussions with the government, civil society, academe, and the private sector on topics ranging from foreign direct investment to child nutrition.

ADB released several studies including Unlocking the Economic and Social Value of State-Owned Enterprises, which explores SOEs’ prominent economic and social role in the country and explains how further reforms can unlock their commercial and developmental potential. Modernizing Local Government Taxation in Indonesia presents the challenges and achievements of a tax project to help subnational governments boost local-source tax revenues; and Building Resilience of the Urban Poor in Indonesia identifies climate resilience solutions for poor people in urban areas.

During the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change, ADB and the Nusantara New Capital Authority launched a scoping study to map Nusantara’s pathway to become a carbon-neutral city by 2045. ADB is also supporting capacity building for the issuance of signature bonds to catalyze green finance including support for the future issuance of blue bonds under the Blue SEA Finance Hub.

  ADB Projects in Indonesia Project data sheets for loans, grants, TAs

Future Directions

Starting in 2023, ADB will intensify discussions on Indonesia’s medium- and long-term development needs beyond 2024.

Indonesia’s transition to clean energy will continue to be a critical component of ADB’s future support, ensuring it is affordable, sustainable, and just. ADB will also support critical infrastructure for connectivity and basic services and expand assistance for low emission transport options.

Investments in climate-smart agriculture will contribute to food security and climate resilience. ADB will seek opportunities to expand climate mitigation and adaptation support across all sectors and in the blue economy. ADB will also support the transformation and resilience of the health sector.

Reform programs will seek to improve the enabling environment for businesses, promote financial inclusion, and deliver efficient and effective public services.