The Sustainable Madani Foundation summarizes several important events related to the economic and political conditions that occurred in the past week (April 26-May 2, 2021). Here are the excerpts:

1. President Jokowi Inaugurates Two Ministers and the Head of BRIN

President Joko Widodo (Jokowi) inaugurated Nadiem Makarim as Minister of Education, Culture, Research, and Technology (Mendikbud Ristek) and Bahlil Lahadalia as Minister of Investment at the State Palace on Wednesday (April 28). These are new ministerial positions after Jokowi decided to merge the Ministry of Education and Culture with the Ministry of Research and Technology and form the Ministry of Investment.

Laksana Tri Handoko was also inaugurated as Head of the National Research and Innovation Agency (BRIN), replacing Bambang Brodjonegoro. Handoko previously served as Head of the Indonesian Institute of Sciences (LIPI). The separation of BRIN from the Ministry of Research and Technology was long proposed by PDIP Chairwoman Megawati Soekarnoputri in 2019. She argued that it was an old idea from the Sukarno era, promoting innovation-based development.

Investment Targets and Different Functions of the Ministry of Investment

According to Bahlil, the President set a target of attracting Rp 900 trillion in investment throughout 2021 and invited major investors, including Tesla. One of the steps Bahlil has taken to meet this target is implementing the Job Creation Law. Various resources must also be improved, such as improving the Online Single Submission (OSS).

Furthermore, according to Bahlil, the difference between the BKPM and the Ministry of Investment is that while the BKPM has previously only executed regulations such as Ministerial Regulations, Laws, or Government Regulations, the Ministry of Investment can directly create regulations, thus acting beyond its mere executor role. Furthermore, the Ministry of Investment can also elaborate on investments within other ministries.

2. Indonesia and the US Collaborate to Address Climate Change Through USAID BIJAK

Indonesia and the United States are collaborating to address climate change through the United States Agency for International Development's Build Indonesia to Take Care of Nature for Sustainability (USAID BIJAK) program. Since 2016, the USAID BIJAK program, with funding of USD 19.6 million (Rp 284.2 billion), has collaborated with the Ministry of Environment and Forestry (KLHK), the Indonesian Institute of Sciences (LIPI), and other key partners to revise policies, guidelines, and procedures to strengthen environmental conservation.

This partnership helps Indonesia protect at-risk ecosystems, reduce encroachment and land disputes, and leverage data to manage natural resources more effectively and transparently. According to USAID, the program also increases demand for national park and wildlife conservation actions.

The Director General of Natural Resources and Ecosystem Conservation at the Ministry of Environment and Forestry, Wiratno, said the Indonesian government will use instruments developed jointly with USAID BIJAK to achieve the goal of resolving land disputes covering 1.8 million hectares in conservation areas and protecting 43 million hectares of habitat with high carbon stocks and conservation value.

3. Global Standards on Climate Change Risks Targeted for Publication in Mid-2022

A standard-setting body for corporate financial disclosures related to climate change risks is about to be formed. Governments and financial regulators from various countries have asked the London-based International Financial Reporting Standards Foundation (IFRS) to establish a new body to develop standards for how public companies should disclose climate change risks in their operations. They want a consistent set of global norms to replace the current patchwork of public and private sector approaches that make it difficult for investors to compare.

The first group of standards will align with norms established by the Task Force on Climate-related Financial Disclosures (TCFD), the current global regulator. Some companies have already voluntarily adopted these standards. The Sustainability Standards Board (SSB) will establish minimum global standards, which will be voluntary and will be left to each member country to implement. This approach allows each country to improve the standards established by the SSB.

The SSB will have at least a chair and vice-chair, or even all members, at the UN climate change conference COP 26 in Scotland in November, which will be attended by world leaders. Support for the SSB's formation has come from various parties, including the European Union, the United States, the IMF, the United Nations, the United Kingdom, and global financial regulatory bodies such as IOSCO and the Financial Stability Board, which coordinates financial regulation within the G20 group.

4. The majority of foreign investment in the agricultural sector is in oil palm plantations.

The Ministry of Investment/Investment Coordinating Board (BKPM) noted that the majority of foreign investment in the agricultural sector was still in the form of oil palm plantations in the 2015-March 2021 period. Head of the Sub-Directorate of the Agribusiness Sector of the Ministry of Investment/BKPM, Jumina Sinaga, revealed that most of the investment in the food crops, plantations, and livestock sub-sectors in Indonesia came from Singapore (53.7 percent) and Malaysia (15.8 percent).

Jumina detailed that the realization of Foreign Direct Investment (PMA) in the agricultural sector reached US$9.5 billion or contributed around 5.2 percent of the total PMA in Indonesia during the 2015-March 2021 period. On the other hand, domestic investment (PMDN) during that period reached IDR 173.9 trillion or contributed 9.1 percent to the total PMDN in Indonesia.

5. The Indonesian palm oil industry is not affected by Covid-19.

The Indonesian Palm Oil Producers Association (GAPKI) stated that the Indonesian palm oil industry was not affected by COVID-19. This caused the volume of palm oil exports to surge sharply by 62.7 percent month-on-month (mtm) from 1.99 million tons to 3.24 million tons in March 2021. In line with the export growth, the average price of palm oil was US$1,116/ton CIF Rotterdam, up 19 percent, or US$21, compared to February. The combination of price increases and export volumes boosted the value of palm oil exports by 80 percent from US$2.08 billion to approximately US$3.74 billion in March 2021.

Meanwhile, Indonesian palm oil production rose more than 20 percent to 3.71 million tons in March. Mukti said this increase was a production overflow from the previous month. However, he stated that final palm oil availability actually fell from 4.02 million tons to 3.20 million tons in March. This was because the increase in production in March was smaller than the increase in exports and domestic consumption, which totaled an estimated 1.4 million tons.