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Two issuers in the new and renewable energy sector, PT Barito Renewables Energy Tbk (BREN) and PT Pertamina Geothermal Energy Tbk (PGEO), are competing to expand their business to develop capacity and accelerate growth. Their expansion has sparked euphoria among investors for their shares.

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Go Greener: Central Java’s Efforts to Attract Sustainable Investment

Jateng Investment

Magelang, August, 21-22 2023 – Central Java aims to attract green investment of up to IDR 65 trillion by 2023 (based on data from the Ministry of Investment /Investment Coordinating Board, BPKPM) to encourage sustainable economic growth and to achieve the target of net zero emissions (NZE). For that, green investment must prioritize environmental friendliness and commit to educating the local workforce, transferring technology, and carrying out products downstream. Additionally, sustainable aspects must be considered when preparing green investment projects.

In line with efforts to increase the regional sustainable economy, the Provincial Government of Central Java, through the One-Stop Investment and Services Agency (DPMPTSP), collaborated with Bank Indonesia Representatives for Central Java Province to organize the Central Java Investment Business Forum (CJIBF), 2023. The forum was designed to foster collaboration between the government, Bank Indonesia, and business actors to increase investment growth and promote sustainable economic development in Central Java. The CJIBF allowed investors to invest in the region, resulting in an investment interest of IDR 18.5 trillion.

Ganjar Pranowo, Governor of Central Java, said the realization of green investment does not only focus on investment but also needs to build an investment ecosystem both at the community and regional government levels. If the investment ecosystem is established effectively, the government must support it by facilitating licensing and services, providing incentives such as prioritized services, commitment, compliance, and enhancing human resources or a skilled workforce in the Central Java regions.

“The Provincial Government of Central Java has a significant initiative to improve human resources and encourage green investment. One of their plans is to construct vocational or vocational high schools and establish special departments focusing on renewable energy,” said Ganjar Pranowo.

Ganjar emphasized the importance of aligning the needs of workers in the business and industrial sectors with the curriculum and learning in vocational high schools. This would require a concerted effort by the government to ensure that the local workforce is trained according to the specific requirements of companies, enabling them to remain competitive.

On the other hand, the Expert Staff for Macroeconomics at the Ministry of Investment/Investment Coordinating Board (BKPM), Imam Soejoedi, mentioned that Central Java Province is a highly favorable location for investment. The CJIBF event aims to strengthen Central Java’s investment opportunities and economic competitiveness, leading to sustainable economic growth.

Imam believes investors see investment in Central Java (Central Java) as more effective and efficient. Central Java also has a low incremental capital-output ratio (ICOR); this indicates that the lower the ICOR, the more efficient investment will be. The success of investment in Central Java is also supported by investors’ trust in the local government.

“Numerous investors have invested in Central Java, which houses the largest glass factory in Southeast Asia, the Nestle industry, the battery industry in Batang, and the food industry in Kendal. Trust plays a crucial role in investment. Even if the location is exceptional, if investors lack trust in the central and regional governments, they may relocate to other provinces or regions,” said Imam.

Meanwhile, Hendri Saparini, Founder and Senior Economist at CORE Indonesia, said Central Java should prepare to compete in green and sustainable investment on both national and international levels. The shift towards green investment should be matched with education and fostering an investment ecosystem at the community and local government levels to ensure sustainability and global impact.

“Central Java requires a green roadmap, which the district/city legislature should back. Additionally, it is crucial to strongly commit to incentivizing companies and investors to advance green investments in Central Java. This will help to attract investors and make investing in Central Java more accessible,” explained Hendri Saparini.

Encouraging the Growth of Renewable Energy Investments in Central Java

Semarang, July 4, 2023 – Recognizing that renewable energy investments play a crucial role in addressing climate change and achieving the Paris Agreement, the Institute for Essential Services Reform (IESR), in collaboration with the Government of Central Java Province, held the ‘Central Java Renewable Energy Investment Forum 2023’ event. This activity is a platform to promote the potential of renewable energy investments in Central Java to achieve the target of a 21.82% renewable energy mix in Central Java Province by 2025. Exceeding the target with a renewable energy mix of 15.76% in 2022 has encouraged the Government of Central Java Province to proactively open doors for renewable energy investments to achieve the set targets and maintain regional economic competitiveness.

Fabby Tumiwa, Executive Director of IESR, explained that Central Java has abundant potential for renewable energy, particularly solar energy. According to IESR’s study, if 9 million residential buildings install rooftop solar power systems, it could generate 100,000 megawatts (MW). Additionally, if the 35 regent and mayor offices throughout Central Java install rooftop solar power systems, it would generate around 5 megawatts (MW) of solar energy. Fabby emphasized that the renewable energy potential in Central Java, including wind power plants, micro-hydro power plants, biomass power plants, and geothermal power plants outside of Central Java, reaches 198 megawatts (MW).

“The availability of renewable energy is now a key factor in attracting investments. Therefore, if we want to enhance investment competitiveness in Central Java, it is necessary to increase the availability of green energy supply. This becomes a new indicator for investors. The vast potential of renewable energy sources cannot be realized without funding for their development,” explained Fabby Tumiwa.

Vice Governor of Central Java Province, Taj Yasin Maimoen, explained that Central Java has abundant solar energy potential that is yet to be fully utilized. Therefore, the use of solar power plants needs to be accelerated. Since 2019, the Provincial Government of Central Java, through the Department of Energy and Mineral Resources, has installed solar power plants in every regional organization office, including the Central Java Regional Council and several educational institutions. The use of solar power plants is aimed at reducing carbon emissions and has economic benefits, such as reducing electricity expenses by around 30-40%.

“Central Java has competitive potential, including infrastructure support, workforce, and a strong commitment to investment. The renewable energy sector presents a new investment opportunity in Central Java, considering the growing needs of the manufacturing ecosystem, which requires alternative energy sources to meet its production. This potential needs to be managed together,” said Taj Yasin.

Sakina Rosellasari, Head of the Investment and Integrated One-Stop Service Agency (DPMPTSP) of Central Java Province, stated that Central Java has a general investment plan, to promote environmentally conscious investment policies (green investment). According to DPMPTSP records, there are 690 permits for self-supply electricity providers (IUPTLS), and the number of rooftop and steam IUPTLS is approximately 17 as of June 2023.

“There are several projects ready to be offered in the renewable energy sector in Central Java, including the development of mini hydropower plants in Banjaran and Logawa, Banyumas Regency, the construction of floating solar power plants in Wadaslintang Reservoir, the development of geothermal power plants in Candi Umbul Telomoyo and Baturaden, Banyumas Regency. Realizing investments in Central Java is expected to increase community income and provide employment opportunities,” stated Sakina.

Cahyo Purnomo, Director of Promotion for East Asia, South Asia, the Middle East, and Africa at the Ministry of Investment/BKPM, stated that the energy transition process cannot happen overnight; it requires time and commitment. The development of renewable energy is one of the efforts toward a low-carbon economy, and so creating a conducive investment climate is necessary.

“For example, in formulating regulations, predictability is essential for investors. We encourage direct investment based on a long-term perspective, not just for 1-2 years. Therefore, it is important to have a stable investment climate, and the formulation of regulations should involve all stakeholders; there should be no mere spectators,” said Cahyo.