Indonesia is gearing up to accelerate foreign investment in emissions-reduction projects through a new set of policy reforms designed to unlock private capital and support its energy-transition goals.

A forthcoming white paper ‒ cited by Bloomberg ‒ reveals that authorities have completed the governance framework and operational plan for the Sustainable Finance Committee, a national body established to harmonize fragmented climate-related regulations and investment policies.

The committee, overseen by the Ministry of Finance, is expected to include around 20 senior members from key institutions such as the Financial Services Authority (OJK) and the Indonesian Central Bank (BI). Membership is scheduled to be finalized in the first quarter of 2026, supported by a dedicated secretariat and technical working groups.

The platform aims to improve investor confidence by offering clear visibility on regulations, incentives, project pipelines, and risk-mitigation tools for green investments in what is considered a highly promising market.

“Investors tell us they need stronger, more credible, more transparent institutions to commit capital to the Indonesian market,” Simon Horner, managing director for external affairs at the Green Finance Institute, which is advising the government, said.

He added that foreign investors often struggle to understand Indonesia’s financial ecosystem, including the role of development finance institutions and state-owned banks.

Major investment gap

Indonesia’s most recent Nationally Determined Contribution (NDC) submitted to the United Nations projects that national carbon emissions will peak in 2030 under both stated economic growth pathways. To meet its climate commitments, however, the country estimates it will require at least US$472.6 billion (Rp7,873 trillion) in investment.

Government data shows that between 2018 and 2023, it allocated 702.9 trillion rupiah to climate-focused initiatives ‒ only a fraction of what is needed.

International support has also lagged behind expectations. The Just Energy Transition Partnership (JETP) ‒ a US$20 billion financing pledge from developed nations ‒ has so far produced about US$3 billion in approved funding and only four supported projects. The United States withdrew from the arrangement earlier this year.

Previously, President Prabowo Subianto has set an ambitious target for Indonesia, one of the world’s most coal-dependent economies: a full shift to renewable energy by 2035.

The government has identified six priority sectors ‒ including energy, food, water and health ‒ as especially vulnerable to climate impacts such as extreme rainfall, prolonged droughts, and increasing heat waves. Faster mobilization of private investment is seen as essential to protect Southeast Asia’s largest economy, currently valued around US$1.4 trillion.

With the Sustainable Finance Committee soon operational, Jakarta hopes to present a more unified and investment-friendly framework that will encourage global capital to flow into its climate transition ‒ and ensure the country stays on track to meet its environmental commitments.