Yayasan Madani Berkelanjutan has summarized several key political and economic events from the past week (August 3, 2021 – August 9, 2021). Here is the roundup:
1. BMKG Warns of Climate Change Impacts: Tropical Storms to Melting Ice on Jayawijaya
Head of the Meteorology, Climatology, and Geophysics Agency (BMKG), Dwikorita Karnawati, outlined worst-case scenarios resulting from climate change, including tropical storms, landslides, flash floods, and the melting of ice on Papua’s Jayawijaya Peak. Regency and city governments are urged to prepare for these severe natural disasters and climate impacts—such as tropical storms, floods, flash floods, landslides, strong winds, and droughts—which are predicted to occur more frequently and with greater intensity, along with sea-level rise and the complete disappearance of the Jayawijaya ice cap by 2025.
Dwikorita urged local governments to implement climate change mitigation and adaptation measures to prevent larger risks and losses. She highlighted World Meteorological Organization (WMO) data showing that 2020 was one of the three warmest years on record despite La Niña. Additionally, the global average surface temperature has reached 1.2°C above pre-1850s levels.
In Indonesia, BMKG observations ranked 2020 as the second-warmest year on record. Data from 91 BMKG stations indicated that average surface temperatures in 2020 were 0.7°C higher than the 1981–2010 baseline average.
2. Indonesian Economic Growth Surges 7.07 Percent in Q2 2021
Statistics Indonesia (BPS) reported that Indonesia’s economy grew by 7.07 percent year-on-year in the second quarter of 2021, pulling the nation out of a recession caused by the COVID-19 pandemic. On both a quarterly and annual basis, this growth marks a significant recovery from -0.74 percent in Q1 2021 and -5.32 percent in Q2 2020. Accumulatively, Indonesia's economy grew by 3.1 percent in the first half of 2021 compared to H1 2020.
This growth was primarily driven by export expansion, which surged 10.36 percent from Q1 2021 and 55.89 percent from Q2 2020, spurred by global trade recovery and stronger demand from trading partners. Imports also rebounded—up 50.12 percent year-on-year and 9.88 percent quarter-on-quarter—signaling domestic industrial recovery.
Domestically, increased public mobility during Q2 2021 further boosted economic activity, evidenced by higher foot traffic at shopping areas and increased intercity travel across various modes of transportation.
3. LSI Survey: 75 Percent Agree Government Can Be Trusted to Protect the Environment
A survey by the Indonesian Survey Institute (LSI) showed that a majority of the public views government efforts in natural resource management positively. Most respondents agreed that the government is attempting to strike a balance between pursuing economic growth and addressing environmental concerns.
Specifically, 76 percent agreed that the government is doing its best to balance economic growth with environmental protection (16 percent disagreed), while 75 percent agreed that the government can be trusted to protect the environment (17 percent disagreed).
However, respondents identified significant risks of corruption across the natural resources sector. High-risk areas included commercial fishing (48 percent), foreign-managed mining (49 percent), state- or region-owned mining enterprises (45 percent), foreign-managed oil palm plantations (44 percent), and domestic oil palm plantations (40 percent).
Overall, 60 percent of respondents perceived an increase in corruption in Indonesia over the past two years—a metric that has steadily climbed since November 2020 (40 percent), December 2020 (56 percent), and June 2021 (53 percent).
4. Government Drives Economic Recovery Through Extended Tax Incentives
Vice Minister of Finance Suahasil Nazara assured that the government will maintain financial sector stimuli using State Budget (APBN) funds to sustain economic recovery momentum, including extending tax incentives through the end of 2021.
For businesses, support will target MSMEs and corporations via interest subsidies, fund placements, credit guarantees, and productive assistance for micro-enterprises. These measures, combined with the acceleration of the national vaccination campaign, are expected to keep economic momentum steady.
5. Indonesia Named Candidate for International Scheme to Accelerate Coal Power Closures
Indonesia has been selected as one of the prospective first recipients of an international finance scheme aimed at accelerating the retirement of coal-fired power plants. The initiative was proposed by UK-based insurance firm Prudential, with backing from financial institutions including the Asian Development Bank (ADB), HSBC, and Citibank.
Indonesia has previously pledged to phase down coal usage by up to 60 percent by 2050. Under this proposed Public-Private Partnership (PPP) model—originally reported by Reuters—capital pooled by financial institutions would be used to acquire coal power plants and shut them down well ahead of their scheduled operational lifetimes.
The core strategy involves raising funds to buy coal plants below market cost, allowing investors to be repaid at lower interest rates. The ADB aims to discuss the framework at the upcoming COP26 climate summit in Scotland.
Key challenges remain, including how to convince plant owners to sell, managing facility decommissioning, and determining the impact on carbon credits. Nevertheless, the initiative comes as major international financiers increasingly step back from funding fossil-fuel infrastructure to meet global climate targets.
