It’s Time to Mandate Environment Spending in Indonesia

It’s time to mandate environment spending in Indonesia Indonesia’s government has proposed a new policy requiring all state-funded infrastructure projects to allocate a minimum percentage of their budgets to environmental mitigation measures, according to a recent analysis published by the Development Policy Centre. The proposal, outlined in a Devpolicy Blog post, argues that current spending on environmental safeguards remains inconsistent and often inadequate, particularly in large-scale developments such as roads, dams, and mining operations. The analysis cites data showing that whereas Indonesia has committed to reducing deforestation and meeting its climate targets under the Paris Agreement, actual budget allocations for environmental protection in infrastructure projects frequently fall short of stated goals. In some cases, environmental impact assessments are completed but mitigation funds are either unspent or redirected during project implementation, undermining their intended purpose. The proposal calls for a mandatory earmarking mechanism, where a fixed proportion — suggested to be between 1% and 3% of total project costs — would be legally required to be set aside for activities such as reforestation, soil stabilization, water quality monitoring, and community-based conservation efforts. Advocates argue that such a rule would close loopholes in existing environmental regulations and ensure that ecological costs are internalized early in the planning process. The idea builds on Indonesia’s existing legal framework, including the 2009 Environmental Protection and Management Law, which mandates environmental impact assessments but does not specify how much of a project’s budget must be devoted to mitigation. By contrast, countries like Brazil and Vietnam have implemented similar spending mandates in specific sectors, with measurable improvements in compliance and environmental outcomes. Indonesia’s Ministry of National Development Planning (Bappenas) has not yet issued an official response to the proposal. However, internal discussions within the ministry have reportedly included consideration of performance-based budgeting tools that could tie infrastructure funding to environmental benchmarks. No timeline has been set for when such a rule might be drafted or debated in parliament. The proposal comes amid broader scrutiny of Indonesia’s infrastructure push, which has seen over $400 billion in planned investments under the current administration’s long-term development master plan. Critics warn that without stronger environmental safeguards, the country risks accelerating biodiversity loss, degrading watersheds, and worsening flood vulnerability in densely populated regions. As of now, no legislative draft has been introduced, and no public hearings have been scheduled. The initiative remains under discussion among policy experts, environmental NGOs, and select government advisors, with no indication of when or if it will move toward formal consideration.