The Indonesia Stock Exchange (BEI) has announced that the country’s carbon market is garnering significant attention from foreign investors, particularly from Singapore, Taiwan, and several major global companies, who explore the possibility of participating in Indonesia’s carbon exchange.
Ignatius Denny Wicaksono, Head of Business Development at BEI, said that Indonesia has substantial potential in the carbon market. While Indonesia is a major carbon emitter, it also possesses significant capacity for carbon storage.
Currently, carbon trading in Indonesia is limited to domestic market. Denny highlighted that the voluntary carbon market is currently facing a downturn due to fluctuating demand for carbon credits.
“Even though the voluntary market is experiencing a slight decline, foreign investor interest remains strong. Investors from Singapore and Taiwan have already shown interest in investing, along with several large global companies,” Denny said on Wednesday, August 7, 2024.
Denny cited that since carbon exchange was launched on September 26, 2023, Indonesia has recorded the trading of 613,000 tons of carbon. In contrast, Malaysia’s carbon exchange has recorded 150,000 tons, and Japan’s 450,000 tons. This makes Indonesia’s carbon exchange one of the leading markets in Asia.
With the current potential and government support in strengthening regulations, Indonesia’s carbon market is expected to continue expanding. This development positions Indonesia to become a major player in the global carbon market and contribute to global emission reduction efforts.
Meanwhile, Alin Halimatussadiah, Head of the Environmental Economic Research Group at the Institute of Economic and Social Research, University of Indonesia, pointed out several challenges facing Indonesia’s carbon market.
Alin noted that the Indonesian carbon market requires a large supply of carbon credits and a balanced demand. Additionally, the regulations supporting carbon trading are still limited.
“However, we remain optimistic. As more carbon credits become available, there is potential for growth, and clear regulations are essential,” Alin said.
