A statement of intent between ABAC Indonesia, the country’s name for APEC Business Advisory Council and UNDP has been signed in New York on September 30. The agreement seeks to accelerate financial inclusion for SMEs through the creation of ABAC Indonesia Impact Fund (AIF).

“The partnership that we have between ABAC Indonesia and UNDP aims to support the achievement of continuous programme in Indonesia to provide access to social investment or impact fund for SMEs, in line with the SDG, or Sustainable Development Goals,” said Shinta W. Kamdani, who represent as member of ABAC Indonesia signing the statement of intent.

Kamdani signed the agreement alongside NDP Acting Regional Director for Regional Bureau for Asia and the Pacific (RBAP), Valerie Cliff on “Leveraging Blended Finance for the Sustainable Development Goal” event last Friday, September 27 in United Nation General Assembly, New York.

The event was organized by UNPD jointly with the Government of Indonesia, the Government of Canada and the Government of Jamaica, as well as Tri Hita Kirana Forum for Sustainable Development

The event highlights the crucial role blended finance mechanisms play in financing the SDGs. It draws on the commitment and experiences of these countries and discusses methods to attract private capital towards achieving the SDGs — which could be applied to other countries.

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Present to witness the signing are Coordinator of Maritime Ministry Luhut Binsar Panjaitan, Head of UNDP Achim Steiner, as well as the representative of international regional and multilateral organisations.

The initiation of the impact fund, Kamdani noted, is the first of its kind in Indonesia. “We hope that the arranged structure can attract more investors to contribute for the development of SMEs and SDGs, and to also take into consideration not only the financial sustainability, but also the measurement of social impact with numbers to give the right and impactful decision,” Kamdani added.

Head of UNDP Achim Steiner also expressed the importance of having a domestic and international financial ecosystem through an innovative partnership between public and private, including the blended finance scheme and impact fund to increase the number of funding needed for SDG and leave no one behind.

“Blended finance can unleash much-needed opportunities to fill the massive gap of global funding in achieving the Sustainable Development Goals (SDGs), but faster actions to harness the financing are needed to meet the development agenda, the head of the United Nations Development Programme (UNDP).”

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“The real issue is that the global financial system is not channeling financial flows effectively towards investments for sustainable development. Reorienting even a fraction of the global stock of financial assets would accelerate sustainable development. That requires creating domestic and international financial ecosystems that accelerate the deployment of public and private finance including through innovative partnerships and finance instruments,” said Steiner.

Furthermore, the partnership will see ABAC Indonesia and UNDP focusses on identifying potential SMEs and UNDP’s support in developing ABAC Impact Fund-backed SMEs, encourage inclusive finance for small and medium enterprises.

ABAC Indonesia Impact Fund uses blended finance – combining public, private, and philanthropic funds – to support impact ventures and SDGs in Indonesia.

ABAC Indonesia will provide guidance on the local investment ecosystem and facilitate the mobilisation of seed funding, up to US$5 million, as First Loss Capital, to attract further investors and encourage the capitalisation of the Fund. UNDP will provide technical assistance to identify and evaluate potential impact ventures, using the IMM (Impact Measurement Management) parameters.

UNDP is working alongside governments and other stakeholders to raise awareness, build institutional capacity and increase understanding of the gaps and opportunities in financing the SDGs.

In Indonesia, UNDP has established the Innovative Financing Lab as a collaborative space, bringing all stakeholders from the government, investors, entrepreneurs, religious organisations, financial institutions, and development partners to leverage new finance for the SDGs.

Under the Lab, UNDP has supported the successful issuance by the Government of Indonesia of the first Green Sukuk with a total amount of US$2 billion.

UNDP has also tested blended finance instruments with Islamic charity funds, resources from a state-owned Bank and GEF funding to give access to energy bank to poor community in remote areas, which are currently being scaled up.
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