TEMPO.CO, Jakarta - President Joko Widodo or Jokowi believes Indonesia has the potential to become a market leader in the global carbon trade. He is confident Indonesia will have better carbon trading potential than Peru, Kenya, and Brazil as fellow countries with the largest tropical forest areas.

"The formation of carbon prices by country in Indonesia is also relatively competitive compared to other carbon trading pioneer countries in the world such as Brazil, Peru and India," he said in a written statement, Thursday, January 20.

Jokowi said Indonesia has several REDD+ pilot projects with Result-Based Payment (RBP) schemes such as the Green Climate Fund (GCF), Forest Carbon Partnership Facility (FCPF), and Bio Carbon Fund (BCF) with a total commitment value of around US$273.8 million.

The president also said that the government has a number of policy strategies to realize a green economy through low-carbon development. The policies are stated in the National Medium-Term Development Plan (RPJMN) 2020-2024.

Indonesia has also issued a roadmap to achieve net-zero emissions by 2060, including the net sinks in the forestry and land sectors by 2030.

"There is also the provision of green stimulus to encourage the higher realization of green economy," he said.

The former mayor of Solo said that environmental conservation and restoration efforts have been quite successful in recent years. He claimed the country's deforestation rate has decreased significantly by 75 percent or by 115,000 hectares during 2019 and 2020.

The president also said that forest fires have decreased drastically, with the number of hotspots declining to 1,369 in 2021, far below 2014's 89,214 spots.

In terms of finances, Indonesia issues government bonds for the Environmental, Social, and Governance (ESG) category to expand the investment base that is environmentally and socially responsible. Indonesia has also developed a carbon economic value mechanism as an incentive for the private sector to achieve emission reductions.

Lastly, the state budget implements budget tagging for climate and a carbon tax in dealing with climate change.

Read: Minister Airlangga Asks IDX to Prepare Carbon Trading Mechanism

Mutia Yuantisya