Indonesia's Climate Investment Landscape
As policy, capital, and innovation converge, Indonesia is emerging as a leading destination for climate investment in Southeast Asia.
Indonesia is emerging as one of Southeast Asia's most compelling destinations for climate investment, driven by ambitious decarbonisation targets, growing policy support, and abundant natural resources. From renewable energy and sustainable infrastructure to nature-based solutions and the circular economy, the country's transition to a low-carbon future is creating significant opportunities for long-term investment.
As public funding alone is insufficient to meet Indonesia's climate ambitions, private capital and international partnerships will play an increasingly important role in accelerating project development and delivering meaningful environmental, economic, and social outcomes.
Accelerating Investment Momentum
Indonesia recorded IDR 498.8 trillion in total investment realisation in Q1 2026, a 7.2% year-on-year increase according to BKPM. In February 2025 Indonesia's sovereign wealth fund, Danantara, established plans to deploy USD 13.1 billion in 2026 across waste-to-energy, data centres, chemicals, and agriculture.
70% Renewable Energy Mix Targetted by 2045
Indonesia's long-term development plan targets a 70% renewable energy mix by 2045 and a reduction in greenhouse gas emissions to 93.5% below 2010 levels — framing decarbonization as a core national development goal.
Up to 100% Income Tax Reductions
Eligible investments in pioneer industries, including renewable energy and other strategic sectors, may qualify for corporate income tax reductions of up to 100% for 5–20 years, with additional transitional tax relief depending on investment value and project eligibility.
Comprehensive Tax & Customs Incentives
Qualifying projects may also benefit from a 30% investment tax allowance, accelerated depreciation and amortisation, extended tax loss carry-forward periods, and exemptions on import duties and VAT for eligible machinery and equipment, reducing upfront capital costs and improving long-term project economics.
No Ownership Limits for Foreign Capital
Foreign investment companies in Indonesia are subject to a minimum capital requirement of at least IDR 10 billion (~US$613,000), and under the Positive List, no foreign ownership limitations apply for electricity generation activities of 1 MW capacity and above.
US$146.4 Billion Climate Finance Gap
Indonesia requires approximately US$285 billion in climate investment to achieve its Enhanced Nationally Determined Contribution (NDC) and support its transition to a low-carbon economy. However, more than half of Indonesia's climate investment requirement remains unfunded, presenting significant opportunities for private capital and strategic partnerships.