Report - Indonesian Impact Investment Wholesaler: Unlocking Indonesia’s Impact Investment Potential

Overview:

- The Indonesia Impact Alliance (IIA) Landscape Report 2024 explores Indonesia’s impact investment ecosystem.

- IIA was launched in 2023 to strengthen the impact investment landscape and support enterprises with both financial returns and measurable impact.

- Impact investing is positioned as crucial to address gaps in renewable energy, education, healthcare, and sustainable agriculture.

Challenges:

- Financing Gap: Indonesia has a financing gap of USD 8.7 trillion, with an annual shortfall of USD 152.6 billion.

- Access to Financing: MSMEs employ 96.9% of the workforce but face difficulties in accessing funding.

- Regulatory & Structural Barriers: Lack of incentives for local impact funds and complex regulations discourage fund setup in Indonesia.

- Impact Measurement Challenges: Investors demand standardized reporting and many entrepreneurs lack the skills to measure and report impact effectively.

Opportunities:

- Blended Finance Models: Combining public/philanthropic funds with private investments to de-risk capital and attract more funding.

- Indonesian Impact Investment Wholesaler: Potential mechanism to pool and distribute funds to smaller enterprises.

- Tapping into Local Capital: Utilize government initiatives like KUR loans and MSME lending quotas to bridge funding gaps.

- Growing Support Ecosystem: Most active impact investment market in Southeast Asia with USD 1.44 billion in deals (2020–2022), expanding philanthropic sector, and increasing number of ultra-high-net-worth individuals who can support impact enterprises.