Rich countries' green plans were not written for Indonesia

The IMF and World Bank hold their annual meetings in Bangkok from 12 to 18 October, their first gathering in Southeast Asia since Bali in 2018. Two economists at CELIOS, a Jakarta research group, used an article in the Lowy Institute's The Interpreter to set out what Indonesia should ask for. Bhima Yudhistira Adhinegara and Muhammad Zulfikar Rakhmat start with a warning about borrowed plans. The United States passed the Inflation Reduction Act in 2022, with clean-energy tax credits the Trump administration later cut back. The European Union's Net-Zero Industry Act of 2024 wants at least 40 per cent of Europe's clean technology built in Europe by 2030. For rich countries, the authors write, green industry is mainly about competition and security. "They were made to solve other countries' problems."

Indonesia starts somewhere else. The law caps its budget deficit, the gap between what the state spends and what it collects, at 3 per cent of the economy, and in August the finance minister projected about 2.85 per cent for this year. Manufacturing was roughly 32 per cent of the economy in the early 2000s and sits near 19 per cent now, so factories shrank as a share of output before most Indonesians ever earned a factory wage. About 60 per cent of workers are informal, with no contract and no insurance. Nickel shows the squeeze. Indonesia banned raw ore exports in 2020 and refused the IMF's advice in 2023 to lift it, and a World Bank study found an earlier version of the ban did raise the value Indonesia added to its exports while also pulling in small, inefficient smelters. More than 94 per cent of the power used to process that nickel comes from coal, and a budget already near its legal ceiling cannot pay to clean it up.

Their list for Bangkok is practical. Ask the IMF how to make a resource-based industrial policy work rather than advice to abandon it. Ask the World Bank for cheaper long-term loans and guarantees for clean power and new factories, plus help training the officials who design these schemes, watch them and shut them down when they fail. World Bank chief economist Indermit Gill says industrial policy needs a market big enough, a capable government and enough public money; Indonesia has the first. The authors want success counted in jobs, skills and wages, not in tonnes of nickel processed or investment announced.

Why it matters

If you are one of the roughly 60 per cent working without a contract, the real test of the nickel bet is whether it ever produces a job with a payslip, not whether another smelter opens. Watch what Indonesia actually brings home from Bangkok: cheap long-term credit and training in government agencies would reach you eventually, another promise to process more ore would not. The 2045 high-income target rests on which of those two Jakarta decides to chase.