Sustainable transportation: ASEAN needs creative financing
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Transportasi berkelanjutan: ASEAN butuh pembiayaan kreatif
5 September 2023
By: Hendra Wibawa
Jakarta - Indonesia is committed to realising the sustainable transportation policy in ASEAN by encouraging decarbonisation and creative financing that does not rely on the state budget (APBN).
Coordinating Minister for Economic Affairs Airlangga Hartarto said that the commitment would position ASEAN as a growth epicentrum through sustainable transportation development.
To reduce emission in the transportation sector, Indonesia has constructed several public transportation options, such as Mass Rapid Transit (MRT) and Light Rapid Transit (LRT). It has also encouraged the use of electric vehicles.
According to him, Indonesia and other ASEAN countries have agreed to build an electric vehicle ecosystem and to be a part of the global supply chain.
“As a part of the ASEAN community, Indonesia is committed to developing sustainable regional connectivity as connectivity and mobility are important parts that tie ASEAN countries together,” he said at High-level Dialogue on Sustainable Transport in ASEAN that was held by the Transportation Ministry, as quoted from the press conference on Monday (4/9).
The activity is a part of the agenda of the 43rd ASEAN Summit that will be held from 5 to 7 September 2023 in Jakarta.
During the occasion, the Transportation Minister explained that several public transportation options, such as LRT, MRT, and the high-speed railway, have been constructed to promote the use of public transportation.
Besides that, they also promote electric vehicles that will be the vehicles of the future.
The Transportation Minister mentioned that transportation was crucial for socioeconomic growth, but the transportation sector is also negatively impacting the environment through the use of fossil fuel.
“Transportation contributed 24% to the total CO2 emission in 2022. Hence, it is important to develop sustainable transportation to reduce emission by developing electric mass transportation and vehicles,” Budi Karya said.
The Transportation Minister said that sustainable transportation was the main concern of ASEAN countries, and it has been included in ASEAN Strategic Plan 2016-2025.
Some of the strategies include low-emission transportation, energy efficiency, and integrated lands.
To support sustainable transportation development, excellent collaboration among the government, the private sector, and international financial institutions is required to handle its challenges.
“We, in ASEAN, need funding from the global community. We must collaborate and create a creative financing framework for the sustainability of industries in the transportation sector,” he said.
NRE commitment
After meeting World Bank President Ajay Banga, President Joko Widodo stated that Indonesia was committed to developing new renewable energy (NRE).
According to the Head of the State, Indonesia is continuously strengthening its commitment to realise financing and investment in energy transition and green economy.
The President also stated several issues, such as the global financial system reformation.
The World Bank hopes to realise a fairer financial system.
According to President Jokowi, currently, the global uncertainty situation is affecting development in developing countries.
Hence, President Jokowi sees that collaboration among stakeholders is required to face the situation.
Foreign Affairs Deputy Minister Pahala Mansury said that energy transition in ASEAN has many potentials.
Pahala said that Indonesia has one of the largest nickel reserves in the world that reaches around 22 million metric tonnes. Meanwhile, the Philippines has around 4 million metric tonnes.
“The joint capacity can make ASEAN a key player in the global supply chain of EV batteries. Indonesia and Vietnam are currently developing their ecosystems,” Pahala said at ASEAN Business and Investment Summit on Monday (4/9).
Regarding the global supply chain, Pahala revealed that Indonesia needed to be grateful for ASEAN'sposition as they can be a part of the global supply chain.
According to him, it is extremely relevant considering the increasing geopolitical tension, so ASEAN can be an alternative.
“ASEAN can be an alternative hub for the global supply chain to maintain resilience and reduce risks to the global supply chain,” he stated.
Previously, Coordinating Ministry for Economic Affairs in their press conference stated that one of the efforts implemented by Indonesia was to work together with Australia to realise their ambition to be a main player in batteries and critical minerals.
“The partnership between Indonesia and Western Australia can open large opportunities in the critical mineral sector,” Indonesia’s Ambassador in Canberra Siswo Pramono explained.
Asutra will be the lithium supplier and Indonesia will be the nickel supplier. Both materials are main components in EV production.
Approaching the ASEAN Summit that has been opened today on Tuesday (5/9), leaders of Southeast Asian countries and representatives of ASEAN partner countries have arrived in Indonesia.
The leaders that have arrived in Indonesia include Timor Leste Prime Minister Kay Rala Xanana Gusmao, Vietnam Prime Minister Pham Minh Chinh, Cambodia Prime Minister Hun Manet, Laos Prime Minister Sonexay Siphandone, and Cook Islands Prime Minister Mark Brown.
