The world is increasingly focused on climate change and sustainability issues. Recognizing the importance of these challenges, many companies are eager to implement green technologies in their businesses. In response, Indonesia, through its Ministry of Industry, has launched an intriguing initiative called the Green Industry Service Company (GISCO). This program aims to provide solutions and regulations for industry players to transition towards green industries.

This initiative is a breakthrough from the government to enable Indonesia’s manufacturing sector to achieve Net Zero Emission (NZE) by 2050, a decade ahead of the national target set for 2060. So, what exactly is GISCO? And why is it significant for industries in Indonesia?

The Ministry of Industry remains focused on enhancing the value-added manufacturing sector in Indonesia, aligning with sustainable green industry principles to create a carbon-neutral future. It targets achieving NZE by 2050, ahead of the national goal.

Compared to its peers globally, Indonesia ranks 12th among the Leading Manufacturing Countries in 2023, surpassing Russia and Turkey. Additionally, Indonesia’s Manufacturing Value Added (MVA) reached USD 255 billion in 2023, an increase of USD 14 billion (5.83%) from 2022. Over the past five years (2019-2023), Indonesia’s MVA has shown a consistent upward trend of 4.47%, outperforming the United States, Japan, Germany, Korea, France, and the UK.

“The implementation of green industry principles in Indonesia is reflected in the 2023 Green Future Index, where the country ranks 49th globally as it transitions to environmentally friendly energy, industry, agriculture, and society through investments in renewable energy and green policies. This represents a significant leap of 21 places from 70th in 2022,” explained Minister of Industry Agus Gumiwang Kartasasmita at the opening of the Annual Indonesia Green Industry Summit (AIGIS) in Jakarta on September 19.

Decarbonizing the industrial sector requires support from various stakeholders, especially industry players. The Ministry has acknowledged nine industry associations for their commitment to achieving NZE by 2050.

These associations represent priority subsectors for decarbonization, including the Indonesian Pulp and Paper Association (APKI), the Indonesian Cement Association (ASI), and others like the Indonesian Fertilizer Producers Association (APPI), the Indonesian Ceramic Industry Association (ASAKI), and the Indonesian Food and Beverage Producers Association (GAPMMI).

Challenges to Green Industry

Minister Agus highlighted two key challenges facing the domestic industrial sector in its transition to green practices: financing and technology acquisition.

“It is widely recognized that the two primary issues industries face in this transition are financing and access to technology,” he stated during the AIGIS 2024 on September 19.

To address these challenges, Indonesia is preparing strategic steps, including establishing a Green Industry Service Company (GISCO).

Understanding GISCO

GISCO will play a crucial role in assisting industrial companies in adopting green practices. Its primary function includes developing, designing, building, and managing financing for sustainability projects. Thus, GISCO serves as a strategic partner for companies looking to shift from traditional business models to more environmentally friendly practices.

Through this initiative, the government, particularly the Ministry of Industry, not only sets regulations to encourage the transition but also offers solutions to industry challenges. GISCO will cover initial costs from green financing providers for implementing green technologies or energy efficiency.

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“Payments will be made by companies in stages, with the cost savings generated used to repay GISCO,” explained Andi Rizaldi, Head of the Standardization and Industrial Services Policy Agency (BSKJI) of the Ministry of Industry, at the AIGIS in Jakarta.

After the contract period, companies can fully enjoy the energy savings produced. The hope is that GISCO will lead to more industries becoming certified as green.

To develop the green industry ecosystem, discussions for collaboration with the EU-Indonesia Cooperation Facility (EUICF) are underway. “Currently, we are exploring cooperation for GISCO’s development with EUICF. We hope this partnership can be established soon so that the GISCO concept can be implemented,” he added.

A Sustainable Future with GISCO

The adoption of green industry practices offers numerous benefits, both for the environment and the companies themselves. According to World Bank data, companies that implement sustainable practices can reduce operational costs by up to 20%. This is particularly significant in an era where cost efficiency is paramount.

Moreover, companies investing in sustainability tend to enjoy a better reputation among consumers. A 2015 Nielsen survey revealed that 66% of global respondents were willing to pay more for products and services from companies committed to positive social and environmental practices, up from 55% in 2014. This trend was even stronger among Generation Z respondents (ages 15-20), where the willingness rose to 72%.

This illustrates a strong market demand for products produced under green standards. Therefore, the Ministry of Industry’s initiative to develop a green industry ecosystem and establish GISCO is a positive step toward a more sustainable future. With robust government support and engagement from all stakeholders, Indonesia can accelerate its transition to a more environmentally friendly industrial landscape.

Companies are expected to recognize the long-term benefits of adopting green industry practices, both financially and in creating a positive impact on the environment and society. As such, Indonesia’s vision of becoming a sustainable industrial nation is increasingly within reach.

Is your company ready to embrace the green industry? In the effort to develop Indonesia’s green industry ecosystem, the first step is ensuring that all aspects of your business run smoothly. Bizindo is ready to be your strategic partner in this process. We understand that establishing a company and managing permits related to sustainable practices can be challenging.

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