“However, a key question remains as to whether these recovery policies reinforce the existing “business-as-usual” economic structures with their associated negative impacts on the environment, or whether there is an opportunity to “build back better” where efforts are placed to maximize the shared benefits between the economy and the environment,” the report added.
The joint report said Indonesia’s GDP could increase by $42 billion to $45 billion in 2030, if the country can fully adopt a circular economy and reap the opportunities from the five sectors of the economy mentioned above to help strengthen the economy, create new jobs, lower household costs, and preserve the environment.
The success of boosting that amount of GDP figure would depend on whether Indonesia could adopt the circularities in those sectors, compared to it would under a “business as usual approach.”
The report also said; 4.4 million cumulative net jobs could be created economy-wide between 2021 and 2030, out of which 75 percent could be for women; CO2e emissions and water use could be reduced by 126 million tonnes and 6.3 billion cubic meter (m3) in 2030, respectively (equivalent to 9 percent of the current emissions and 3 percent of the current water usage).
Furthermore, the average Indonesian household could save Rp4.9 million ($344) annually, representing almost nine percent of the current yearly household expenditure.
“By creating new job opportunities, making supply chains more resilient, and providing business opportunities (particularly for Micro, Small and Medium Enterprises), a circular economy can be a key component of Indonesia’s economic recovery,” the joint report said.
However, the report also highlights some challenges, including potential job losses and reduced demand for upstream production in the five focus sectors (under some scenarios). “A robust multi-stakeholder roadmap is envisaged as the next step in this work and will be crucial for tackling these concerns and addressing the barriers for capturing the circular economy opportunities,” the report said.
Adelia Surya Pratiwi, Economist at the Fiscal Policy Agency, Ministry of Finance Indonesia, had previously commented about the challenges of implementing a circular economy in Indonesia. She said, “Circular economy has natural characteristics that are challenging to finance mainly because it is a new sector and requires a high amount of investment for innovation as well as systems and technological change.”
“Although it has huge potential as it is an important vehicle to achieve Sustainable Development Goals (SDGs) as well as the green economy which are already both international and national commitments, it remains a challenge for emerging economies like Indonesia,” she said.
Indonesia has affirmed its commitment to implementing environment and forestry-centric policies to support local, national, and global climate action, including by increasing its greenhouse gas emission reduction target.