Enviro News Asia, Jakarta — The Ministry of Forestry is strengthening sustainable forest management and community welfare through an innovative blended finance approach for social forestry.
The initiative was formalized through the signing of a cooperation agreement between the Badan Pengelola Dana Lingkungan Hidup and selected intermediary institutions (Lemtara), marking the launch of the Enhancing Community Capacity and Initiating Blended Finance for Social Forestry Enterprises project in Jakarta.
Developed under the Sustainable Landscape Investment Partnership Project (KIBAR), the program is supported by the UK Foreign, Commonwealth & Development Office and aims to expand financing access for Social Forestry Business Groups (KUPS) while strengthening their operational capacity.
The blended finance model integrates public funding, development partner support, and other financial sources to create a more inclusive and sustainable financing ecosystem for forest-dependent communities.
The initiative is implemented through collaboration between BPDLH, the Directorate General of Social Forestry under the Ministry of Forestry, and the Global Green Growth Institute, which provides technical assistance and capacity building.
Representing the Directorate General of Social Forestry, Enik Ekowati emphasized that the model is designed to support social forestry enterprises that are not yet fully bankable, positioning it as a key instrument to achieve Indonesia’s FOLU Net Sink 2030 targets.
President Director of BPDLH, Joko Tri Haryanto, stated that the initiative represents a shift toward more inclusive and sustainable financing mechanisms.
He noted that blended finance serves as a bridge between funding sources and real needs at the community level, addressing key challenges in strengthening social forestry enterprises.
International partners also reaffirmed their support. Forest Investment Adviser at UKFCDO, Saul Hathaway, highlighted that the funding aims to reduce investment risks in landscape-based projects and accelerate capital access for local communities.
Meanwhile, Investment Unit Lead at GGGI Indonesia, Charlotte Türk, explained that grant funding under the program acts as a catalytic instrument, complemented by risk mitigation and guarantee mechanisms managed by BPDLH to improve creditworthiness.
Following a competitive selection process involving 40 proposals, 10 projects from eight institutions were selected for implementation. The program will cover seven provinces, 18 districts, involve 64 social forestry business groups, and initiate 16 Integrated Area Development (IAD) initiatives.
The project also promotes agroforestry-based models to balance economic productivity with environmental sustainability. Private sector partners, including Olam, Mars, and Mio, are involved as offtakers to ensure market access and price certainty for community products.
The government emphasized that the program will be implemented with strong accountability and transparency, positioning blended finance as a key driver for sustainable and inclusive forest-based economic development. (*)
