Indonesia Blue Finance Landscape

Public international finance dominates Indonesia's blue finance, while commercial banks are the primary private sources. MSMEs, particularly in the fisheries sector, face significant barriers to accessing formal credit due to physical collateral requirements and a lack of credit history. While most MSME loans are concentrated in Java, the highest growth is observed in the Lesser Sunda Islands. The report recommends reducing entry barriers, investing in human capacity, and improving infrastructure to spur private investment in the blue economy.

• Public international finance is the dominant source of blue finance in Indonesia, with multilateral development banks and foreign government budgets being top public sources. In the private sector, commercial banks constitute the majority of sources, contributing over USD 327 million.
• Commercial loans are the most prevalent blue finance instrument, primarily targeting water and waste infrastructure projects. Other instruments, such as grants, equity, and low-cost project debt, are used in relatively similar amounts.
• Government agencies are the primary recipients of blue finance because most tracked funds are Official Development Assistance (ODA). Public finance is largely directed toward water, wastewater, and disaster risk management.
• MSMEs make up 99.99% of enterprises in Indonesia but face severe barriers to formal financing. Commercial banks typically require physical collateral, which hinders access for many MSMEs that do not own physical assets.
• Geographic and sectoral disparities exist in MSME lending; approximately 59% of MSME loans are concentrated in Java, although the highest average annual growth is in the Lesser Sunda Islands. Sectorally, fisheries represent a very small proportion of MSME bank loans, though the share has shown a consistent upward trend.
• The regulatory environment for starting a business in Indonesia is unfavorable compared to regional peers, ranking #140 globally. Key challenges include high costs and lengthy procedures for registering property and trading across borders.
• Informal lending, such as "Bank Keliling" (loan sharks), remains popular among low-to-middle income groups due to a lack of financial literacy and limited access to formal OJK-acknowledged institutions, often charging double-digit monthly interest rates.

APA

Climate Policy Initiative (2022). Indonesia Blue Finance Landscape. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/06/Indonesia-Blue-Finance-Landscape-Final-1.pdf

Chicago

Climate Policy Initiative. Indonesia Blue Finance Landscape. 2022. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/06/Indonesia-Blue-Finance-Landscape-Final-1.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Indonesia Blue Finance Landscape |date=June 2022 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2022/06/Indonesia-Blue-Finance-Landscape-Final-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022indonesia, author = {{Climate Policy Initiative}}, title = {{Indonesia Blue Finance Landscape}}, institution = {Climate Policy Initiative}, year = {2022}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2022/06/Indonesia-Blue-Finance-Landscape-Final-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }