POINTERS

DEPUTY SECRETARTY OF SME

ASEAN GREEN JOBS FORUM 2024

KUALA LUMPUR, 24th APRIL 202

 Indonesia's Green Innovation and
Entrepreneurship Policy Framework

1. The Urgency of Addressing Climate Change

Threats in Indonesia
 Based on the Indonesia Climate
Transparencey Reprot (2021), About 40%
contribution of the Greenhouse gas in
Indonesia in Indonesia still in Energy &
Electricity Sectors. Other comes from
transporation and construction sector.
 Indonesia faces alarming threats from climate
change, evident in the staggering 96%
predominance of hydrometeorological
disasters out of 3,544 natural disasters
recorded in 2022. As an archipelagic nation,
Indonesia is acutely vulnerable to the adverse
effects of climate change (BNPB 2022).
  The urgency to facing up this climate change
issues also align with our vision of Golden
Indonesia in 2045, and one of the key
components of this vision is reducing
Greenhouse Gas (GHG) emissions intensity
towards achieving net zero emissions.

2. Indonesia’s commitment through Greenhouse

Gas Emission Control
 Despite Indonesia's per capita emissions
being 2.6 tons of CO2e, which is below the
G20 average of 4.8, the country has
witnessed a slight increase of 0.3 in
emissions from 2021 to 2022.
 However, there is a positive correlation
between Indonesia's GDP per capita
performance and renewable energy
consumption, leading to a decrease in
greenhouse gas emissions.
  The implementation of carbon tax,
decarbonization of the transportation
sector, and the adoption of renewable
energy technology are crucial steps in
Indonesia's greenhouse gas emission
mitigation strategy.

3. Waste Management Policies in Indonesia

 From Presidential Decree no. 97 of 2017.
The policy aims to improve waste
reduction and management by focusing on
limiting waste generation through recycling
and reuse, as well as sorting, collection,
transportation, and final processing. It also
outlines strategies, organization,
monitoring, evaluation, and funding for
implementing the policy at both national
and local levels.
4. Policy on Ease of Doing Business for
Enterprises Implementing Circular Economy
 Import Duty Exemptions: Companies in
renewable industries enjoy a two-year
exemption from import duties on raw
materials, which can be extended for an
additional two years if they utilize at least
30% locally-produced machinery and
equipment, as outlined in Ministry of Finance
regulations Number 188 of 2015 and
Number 66 of 2015.
 Income Tax Reduction: The government
offers a significant net Income Tax reduction
(PPh) for six years, equivalent to 5%
annually or 30% of the investment value,
covering 145 eligible business segments for
tax incentives. This incentive, stated in
BKPM Regulation Number 6 of 2018 and
 Ministry of Energy and Mineral regulation
Number 16 of 2015, aims to encourage
investment in renewable industries.
 Tax Incentives for Circular Economy
Enterprises: Investors in renewable sectors
are entitled to tax incentives ranging from 5
to 20 years with a minimum investment of Rp
500 billion. They may receive a maximum
100% reduction in income tax, with
additional benefits such as a Mini Tax
Holiday incentive, detailed in PMK No. 35
Tahun 2018 and Peraturan BKPM No.1
Tahun 2019.
 Super Deduction Tax for Human
Resource Development: Domestic
corporate taxpayers engaged in human
resource development activities, such as
internship and apprenticeship programs,
 may receive a gross income reduction of up
to 200% of the expenses incurred, as
specified in Article 29B paragraph (1) of
Government Regulation Nomor 45 of 2019.
This aims to foster skilled labor in the
renewable industry, enhancing
competitiveness and growth.
5. Opportunities and Challenge to Implement
Circular Economy in Indonesia
 The development of circular economy
presents significant opportunities and
challenges. According to Bappenas (2021), it
could potentially contribute Rp593 trillion to
Rp638 trillion to GDP, generate 4.4 million
jobs, and reduce waste volume by up to
18.53% by 2030. The demand for renewable
entrepreneurship in eco-friendly industries is
soaring, with a remarkable 84% of young
 entrepreneurs expressing a keen interest in
running environmentally conscious
businesses (UNDP,2021). This trend reflects
a growing awareness and commitment
among the youth towards sustainable
practices, indicating a promising future for
eco-friendly ventures in the entrepreneurial
landscape.
 However, challenges such as high
equipment costs, limited infrastructure
support, and supply availability hinder its
progress. Additionally, there's a crucial need
to enhance literacy and awareness among
the public, particularly business actors, in
managing environmentally friendly products.
 Various strategies are being implemented by
Ministry of Cooperative and SME to elevate
funding and market access for SMEs in the
renewable entrepreneurship sector. This
includes an increased banking credit ratio of
30% in 2024, e-commerce platforms for
green products, and the promotion of tech
start-ups through international-scale
exhibitions. Moreover, the allocation of 40%
of Government Procurement for SMEs and
enhancements to the Kredit Usaha Rakyat
(KUR) program, raised to Rp 373.17 trillion,
with a cluster-based approach
encompassing mentoring, marketing, and
partnerships, are aimed at fostering business
growth. Additionally, partnerships between
23 SOEs and other large businesses are
facilitating the development of green value
chains, such as Al Ittifaq organic certification
and initiatives by KEMENKOPERASI UKM.
Factory sharing and the establishment of
 processing centers for coconut and bamboo
commodities further signify a concerted effort
towards sustainable development and
business expansion.

Best Practice Green Innovation

Entrepreneurship

1. Polindo Utama, Established in 2005 by

Mr. Darwin and Mr. Daniel, Polindo
Utama is a prominent Indonesian limited
company specializing in industrial
Polyester and Polyester Materials. As the
nation's largest recycling manufacturing
facility, it has a remarkable total capacity
of 3900 MT per month. Which projected
 til 65 million USD omzet in 2024. Polindo
Utama's core products, including high-
quality Flakes and Pellets, play a vital
role in providing sustainable solutions for
polyester materials, epitomizing its
commitment to the green industry.
2. Sinar Para Taruna Textile (Sipatatex)
specializes in premium warp knitted lace
and tricot fabric, prioritizing top-notch
quality and service for over 40 years.
Committed to environmental protection,
Sipatatex operates a Recycling Plant to
mitigate harmful substance pollution and
adheres rigorously to government
regulations on waste management.
3. Hejotech's Innovation Project focuses
on developing environmentally friendly
technology products by integrating
modern technology with environmental
science to mitigate the negative impacts
 of human activities. With a specialization
in renewable energy, Hejotech produces
wood pellets and wood chips sourced
from compressed wood waste without
any additives or binders. These products
serve various purposes including fuel for
biomass heating, mulching for soil
moisture retention, animal bedding,
composting, and erosion control. With
certifications from the Report of Analysis
(ROA) certificate and Timber Legality
Verification System, Hejotech can supply
up to 10,000 tons of wood pellets
monthly, contributing to sustainable
practices and environmental
conservation.
4. KaIND, a local brand, epitomizes
sustainable fashion by crafting
handwoven fabrics adorned with hand-
drawn batik and hand-stamped batik,
 employing natural dyeing processes to
fashion scarves, ready-to-wear clothing,
and accessories. Embracing circular
fashion production and zero waste
principles, KaIND ensures all its products
are 100% organic and biodegradable.
Their commitment extends to sourcing
1,300 kg of eri silk directly from local eri
silkworm farmers, collaborating with 250
farmers to foster ethical silk farming
practices, exemplifying a holistic
approach to environmentally conscious
fashion.
5. CV Rabersa, established in 1999 in
Wonosobo, Central Java, is committed to
promoting a circular economy by utilizing
resources efficiently and minimizing
waste generation. Specializing in ramie
cultivation and preservation for home
decoration products, CV Rabersa
harnesses the natural cellulose fibers of
the plant's stem bark, known for their
superior absorbency and strength
compared to cotton. With 22 hectares
dedicated to ramie cultivation and
partnerships with 800 farmers across 28
villages, CV Rabersa embodies
sustainability through its circular business
model.