JAKARTA, March 21st, 2024 – Since 2018, an increasing trend of bond issuances with thematic labels – such as green, blue, social, sustainability, and sustainability-linked or commonly known as thematic debt instruments has grown to over USD 1.3 billion in Indonesia, with most of the issuances coming from the government in the international market to support the development of projects to address climate change and social justice issues.

Therefore, UNDP Indonesia conducted an Interactive Dialogue on “Opportunities to Advance Thematic Bonds and Sukuk in Indonesia”. The dialogue invited investors, issuers, and relevant stakeholders to learn about the progress and share reflections on the rapidly evolving thematic bonds and sukuk market in Indonesia.

The Dialogue was attended by representatives from the government, financial institutions, state-owned enterprises, the diplomatic community, and international organizations. Muhammad Didi Hardiana, Head of the Innovative Financing Lab of UNDP Indonesia and Fadilah Kartikasasi, Director of Capital Market and Sharia Capital Market Development, Indonesia Financial Services Authority (OJK), delivered the opening remarks.

Muhammad Didi Hardiana, Head of Innovative Financing Lab, UNDP Indonesia said, “In the Asia-Pacific region, the concerning progress towards SDGs signals a potential 30-year delay, posing a formidable challenge for all nations. Accelerating SDG achievements in the coming years is imperative. Indonesia's commitment to sustainable development, aligned with its vision of 'Indonesia Emas,' underscores the need for substantial funding. Embracing sustainable finance is not novel for a nation grounded in a collective spirit. Today's evening dialogue engages various stakeholders, to explore opportunities, particularly in local currency bonds, to address Indonesia's multifaceted challenges together.”

While the Indonesian government is leading its advocacy in thematic financial instruments like Green Sukuk (a Sharia-based debt instrument), SDG Bond, and Blue Bond, there have been relatively few issuances by the corporate sector in local currency. Further development of the thematic bonds/sukuk market in Indonesia is essential to fulfil the climate and social commitments of the country.

In this regard, at the same time UNDP Indonesia also launched the Knowledge Brief on the “Opportunities to Advance Thematic Bonds and Sukuk in Indonesia”. The brief highlights the potential opportunities for Indonesia to increase the volume of thematic bonds and sukuk issuance to achieve the country's commitment to sustainability and climate agenda. It recommends expanding the range of bond types issued, such as Sustainability Linked and Transition Bonds, and reaping the benefits of issuing bonds and sukuk in local currency. The launch session continued with a presentation by UNDP Indonesia, delivering the key points from the Knowledge Brief.