81313481-Strengthening of analytical capacities and policy formulation for a green transformation in Indonesia

The government of Indonesia has recognised the need to transform the economy into a green and inclusive economy, developed strategies and introduced initial reforms. Key strategies include the RPJPN 2005-2025, RPJPN 2025-2045, the RPJMN 2020-2024 and the RPJMN 2025-2029 under development. One of the central goals until 2045 is to escape the "middle-income trap" by generating annual economic growth of between 5.6 % to 7.8 %. The transfer of the various strategies into effective policy measures has had only limited success. The capacity to effectively plan and implement the necessary policy measures and the capacity to realistically assess their impact on green economic development are insufficient. In addition, capacities are needed to recognise obstacles to green growth, for example through appropriate diagnosis to be able to counteract them with suitable policy measures (cf. e.g. the OECD paper "Tools for Delivering Green Growth"). Bappenas and the sector ministries do not have adequate analysis and planning tools. Similarly, the competences for interpreting and deriving policy recommendations are not comprehensive enough to do justice to the complexity of the green transformation. Policy formulation and implementation are not sufficiently coordinated to reflect the challenges of reality in planning documents on the one hand and to efficiently and effectively implement the political priorities for green economic development in the various sectors on the other. This also affects capacities at provincial level, which face challenges in implementing national strategies due to their different economic structures and geographical conditions. The harmonisation of policy formulation and coordination in accordance with the political objective, the complexity of the necessary measures and the coordination of the actors involved at national, sectoral and regional level pose enormous challenges for Indonesia. The institutional conditions for the transformation to a green economy in Indonesia are insufficient at national and regional level. The technical cooperation (TC) project "Green Economic Recovery: Green Growth Diagnostic Framework in Indonesia", commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH supports the Indonesian Ministry for National Development Planning (Bappenas) to improve the institutional and regulatory framework for the transformation towards a Green Economy in Indonesia at the national and provincial level. The project addresses the necessary improvements for planning and managing the implementation of the green transformation of the economy. These needs were also identified in the OECD Green Growth Policy Review of Indonesia 2019 as central to the green transformation of the economy. The module objective is: The institutional conditions for the transformation to a green economy in Indonesia are improved at national and regional level. The project works towards the following 3 outputs: 1. Enhancing analytical capabilities: The project enhances the Ministry of National Development Planning (Bappenas) and other relevant actors' analytical skills for evidence-based planning of the green economy transition. This may include improving economic models, refining data for accurate calculations, and providing training for professionals. 2. Aligning policy formulation: The project works to ensure better coordination of green economy policies between Bappenas, line ministries, and other authorities by fostering collaboration in scenario development. It emphasises early stakeholder involvement and integrates gender-sensitive policy scenarios. 3. Improving planning and monitoring: In selected provinces, the project enhances the capability to plan and monitor green economic transformation by identifying potential challenges, offering recommendations, and supporting the advancement of existing green initiatives.