Climate finance plays a critical role in addressing climate change issues. Global donors have provided much of this finance to help developing countries adapt and cope with ongoing climate change effects. However, limited technical capabilities and political interference in said countries can cause difficulties for donors, particularly when they want to implement it themselves. In this brief, we examine key problems faced by global donors in deploying their climate funds to developing countries and propose solutions on how the government can enable the mobilisation of such funds.We find that the government of Indonesia(GoI) has established a national intermediary called the Indonesian Environment Fund (IEF) under the Ministry of Finance. However, the IEF still has shortcomings, and could be rectified to unleash its full role in mobilising climate finance. Improvement of the IEF is necessary to help scale up the amount of funding, encourage more blended financing, and develop local implementation capabilities.

RDI eBook series, No.1 (DCR) 20230702

ASEAN

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Low-income people (MBRs) are one of the groups who will be profoundly affected should earthquakes occur. As there is not yet an established earthquake insurance scheme for MBRs and households in Indonesia, there is a need to have a thorough understanding on how Indonesia has progressed on the earthquake insurance scheme for low income people. This study analyses existing regulations, legal frameworks, and laws related to existing financing schemes for affordable housing, land and building taxation and earthquake insurance tariffs. In order to illustrate how MBRs can afford a house well as protecting it from the risk, short exercises on the integration of earthquake insurance tariffs, microinsurance, affordable housing provision, and building taxation, complements this study with a case in Bandung. This study argues that microinsurance policy can potentially be integrated with the existing scheme of the affordable housing provision and the land and building taxation scheme with limitation in its small payout. Another result shows that in order to increase people’s willingness to purchase insurance, the GoI can utilise its existing SE OJK 6/2017 by increasing the premium of the product than microinsurance but at the same time offers more benefit to the insurers. Every integration scheme analysed in this study is aimed to not only at protecting the continuation of people’s lives and assets from earthquake risk but also triggers the group to own a formal houses with the help of subsidies, thus helping to reduce the fast-growing illegal or informal settlements.