ADB Approves $500m Loan for Indonesia’s Development Agenda, Reforms

The Asian Development Bank (ADB) has given its approval for a $500 million loan to support Indonesia’s efforts in enhancing its investment climate, boosting trade, and promoting industries. This loan is an extension of the Competitiveness, Industrial Modernization, and Trade Acceleration Program (CITA) and follows the successful implementation of its initial subprogram in October 2021.

Under this second subprogram, the Indonesian Government is intensifying its efforts to create a favorable environment for investments and reduce trade barriers. Significant progress has been made in the speed of business license approvals through the implementation of an updated online single-submission system and the integration of various governmental processes.

The objective of this initiative is to attract substantial investments that will support Indonesia’s transition to a sustainable, low-carbon economy. The government is actively promoting green investments and providing approvals for the manufacturing of batteries for electric vehicles, which is expected to create around 49,000 jobs through five major contracts.

In line with the National Logistics Ecosystem Masterplan (2020-2024), the government has introduced three new systems to strengthen digital connections between the public and private sectors in the logistics chain and improve the national single window.

Furthermore, measures to support enterprises, particularly those owned by women, and nurture export and technology-oriented businesses have also been implemented. This includes the establishment of an integrated system specifically designed for small to medium-sized enterprises, with a focus on a sex-disaggregated approach.

Jiro Tominaga, ADB Country Director for Indonesia, stressed the importance of ongoing structural reforms to exceed the pre-pandemic average annual GDP growth rate of 5.3% and achieve a minimum growth rate of 6.0% to attain high-income status by 2045. He emphasized that the policy reforms under the program will attract more investments, including those in green and sustainable businesses, facilitate trade, and empower local enterprises.

The approval of this loan is in line with Indonesia’s Vision 2045 and the National Medium-Term Development Plan 2020-2024. It also aligns with the ADB’s strategic pathway for Indonesia from 2020-2024, focusing on economic recovery and climate resilience.

The ADB remains committed to promoting prosperity and sustainability in Asia and the Pacific, with a continuous effort to eradicate extreme poverty. Since its establishment in 1966, the ADB has grown to include 68 members, with 49 of them belonging to the region.

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