Indonesian Chamber of Commerce and Industry (Kadin) Chairman, Arsjad Rasjid said Indonesia is not only following the global trend of developing impact investing, but also becoming the most active investment destination in the region.

‘Indonesia not only follows this (impact investing) trend, but is also the most active market in the region,’ Mr Rasjid said at the opening of Impact Investment Day (IID) 2024 in Labuan Bajo, East Nusa Tenggara (NTT), Sunday (8/9/2024).

Through a video, he said that in recent years, impact investment has started to gain momentum in Indonesia as investors have become more aware of environmental, social, and governance (ESG) principles.

According to him, impact investing has experienced significant growth over the past few years, due to the need to address crucial global issues, such as poverty, inequality, and climate change.

He said, based on data from the Global Impact Investing Network (GIIN), the amount of assets managed with impact investment principles worldwide reached more than US$ 1.1 trillion or Rp 16,927.9 trillion.

Meanwhile, according to the Australian Agency for International Development (Ausaid), there are around 131 draft laws (bills) formed in Indonesia during 2020-2022, attracting an investment value of nearly US$1.5 billion or Rp 23.08 trillion.

‘The trend is clear, more investors are adjusting their portfolios to resolve global issues,’ said Arsjad.

The trend, he continued, also encourages a paradigm shift in social and environmental impacts that are now starting to be considered for realisation, in addition to financial returns.

Investors are now prioritising long-term investments that promote a low-carbon future and sustainable development.

However, he noted that such investments are still not enough to address Indonesia's growing social inequality.

‘This challenge is too big to be solved only by individuals, companies, CSR or social and environmental responsibility (CSR) contributions, or non-governmental organisations (NGOs),’ Arsjad said.

To overcome these challenges, he said that the realisation of impact investment needs to be increased through the formalisation of social entrepreneurship.

This is because social entrepreneurship encourages innovative solutions to address poverty and inequality in society, and does not only focus on creating business profits.

He also said that many social enterprises are now helping and partnering with the government in development.

‘As a government partner, Kadin actively supports the formation of the Social Entrepreneurship Bill which aims to create a framework that provides opportunities for these businesses to attract more impact investment,’ concluded Arsjad.