The Indonesian government aims to integrate activities relating to environmental sustainability and social enterprises into Indonesia’s financial legislative framework. To further this aim, the Financial Services Authority (Otoritas Jasa Keuangan/OJK) issued new regulations (the New Regulations).* The New Regulations are intended strengthen Indonesia’s capital market industry through the development of debt securities and Sharia compliant bonds, sukuk, that relate to environmental sustainability and social enterprises. The New Regulations are not only limited to environmental debt securities (green bond), but also cover environmental sukuk (green sukuk), social debt securities (social bond) and sukuk (social sukuk), sustainability bond and sukuk, sukuk-linked waqf and sustainability-linked bond and sukuk.
The New Regulations apply to relevant financial instruments issued through a public offering or privately, if they have a due date of more than 1 year.
The New Regulations require that issuers of the relevant securities must submit an annual report to the OJK covering the performance of the financial instrument. This report must be reviewed by an independent reviewer provided by the issuers. Issuers should ensure the independence of the independent reviewer. Administrative penalties apply for failure to submit the annual report – including business licence revocation.
The New Regulations replace OJK Regulation No. 60 Year 2017 on the Issuance and Terms of Green Bond.
* Financial Services Authority Regulation Number 18 of 2023 on the Issuance and Terms of Debt Securities and Sustainability-Based Sukuk.
