Indonesia Environment Fund: Bridging the Financing Gap in Environmental Programs

This report analyzes the establishment and operational framework of the Indonesia Environmental Fund Agency (BPDLH), a public service agency (Badan Layanan Umum or BLU) designed to act as a "funding hub" for environmental protection and climate change mitigation. The document examines the BLU regulatory framework, compares BPDLH with seven other fund-managing BLUs in Indonesia, and details specific funding windows such as the REDD+ Fund and the Forest Rehabilitation Revolving Fund.

• The Indonesia Environmental Fund Agency (BPDLH) is established as a non-structural public service agency (BLU) under the Ministry of Finance to manage funds for environmental protection, including climate change mitigation and adaptation. Its broad mandate covers sectors such as forestry, energy, carbon trade, ecosystem services, transportation, agriculture, and marine and fisheries.
• BPDLH is the first BLU in Indonesia with the explicit flexibility to source both state funds (APBN) and international financing, allowing it to act as a "funding hub" that bridges gaps between existing environmental program funding mechanisms.
• The BLU legal vehicle provides significant operational flexibility, allowing BPDLH to use internal procurement procedures for non-tax state revenue (PNBP) and donor-specific guidelines for trust funds, rather than being strictly bound by government procurement rules.
• BPDLH operates under a dual financial reporting system: it uses Financial Accounting Standards (FAS) on an accrual basis for PNBP funds to record government spending, and Government Accounting Standards (GAS) on a cash basis for consolidation with the home ministry's report.
• To maintain fiduciary standards while attracting professional expertise, BLU regulations allow for a mix of civil servant and non-civil servant staff, though only civil servants are permitted access to the BLU treasury because revenue is considered state revenue.
• BPDLH manages diverse revenue sources beyond the state budget, including conventional grants, results-based payment grants, donations, return on investment, and carbon trading.
• The REDD+ funding window utilizes several instruments, including Result-Based Payment (RBP) Grants, conventional grants, and carbon trade payments, targeting beneficiaries such as national/sub-national governments, CSOs, private sectors, and research institutions.
• The Forest Rehabilitation Revolving Fund, absorbed from the former Forestry Fund (P3H), provides conventional, revenue-sharing, or sharia loans to legal entities in the plantation and forestry business to finance land and forest rehabilitation.
• A comparison of seven existing fund-managing BLUs shows varying effectiveness; for instance, the Cooperatives Fund successfully disbursed most of its funds, while the Palm Oil Fund (BPDPKS) allocated 70% of spending to biodiesel subsidies, leaving limited resources for R&D and smallholder productivity.

APA

Mafira, T., Mecca, B., & Muluk, S. (2020). Indonesia Environment Fund: Bridging the Financing Gap in Environmental Programs. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/04/Indonesia-Environment-Fund-Bridging-the-financing-gap-1.pdf

Chicago

Mafira, Tiza, Brurce Mecca, and Saeful Muluk. Indonesia Environment Fund: Bridging the Financing Gap in Environmental Programs. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/04/Indonesia-Environment-Fund-Bridging-the-financing-gap-1.pdf.

Wikipedia

{{cite report |last1=Mafira |first1=Tiza |last2=Mecca |first2=Brurce |last3=Muluk |first3=Saeful |title=Indonesia Environment Fund: Bridging the Financing Gap in Environmental Programs |publisher=Climate Policy Initiative |date=April 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/04/Indonesia-Environment-Fund-Bridging-the-financing-gap-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mafira2020indonesia, author = {Mafira, Tiza and Mecca, Brurce and Muluk, Saeful}, title = {{Indonesia Environment Fund: Bridging the Financing Gap in Environmental Programs}}, institution = {Climate Policy Initiative}, year = {2020}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/04/Indonesia-Environment-Fund-Bridging-the-financing-gap-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }