ADB Approves $500 Million Loan to Boost Indonesia’s Green and Competitive Growth

Under the CITA Subprogram 3, Indonesia will continue implementing reforms to make its economy more competitive, sustainable, and inclusive.

The Asian Development Bank (ADB) has approved a $500 million policy-based loan to support Indonesia’s ongoing structural transformation, drive green growth, and enhance its global trade competitiveness. The financing will fund the third subprogram of the Competitiveness, Industrial Modernization, and Trade Acceleration (CITA) Program — an initiative that underpins Indonesia’s long-term vision of achieving high-income status by 2045.

“Indonesia is committed to achieving high-income status by 2045, which requires sustained economic growth and structural transformation,” said ADB Country Director for Indonesia, Jiro Tominaga. “The reforms under CITA subprograms will help attract greater investment in green and sustainable businesses, reduce trade barriers, and empower local enterprises, particularly those owned by women.”

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Advancing Industrial Modernization and Green Growth

Under the CITA Subprogram 3, Indonesia will continue implementing reforms to make its economy more competitive, sustainable, and inclusive. The initiative supports government-led measures to strengthen policy frameworks for industrial modernization, reduce trade constraints, and create an enabling environment for private investment.

Key reforms include:

• Simplified Licensing Systems: Automatic issuance of business permits through an upgraded Online Single Submission (OSS) system to reduce red tape and improve the ease of doing business.

• Green Industry Promotion: Tax incentives for electric vehicle (EV) manufacturing and renewable energy technologies to accelerate the green transition.

• MSME Empowerment: New incubator programs and a nationwide MSME census to identify growth barriers and strengthen small business resilience.

• Sustainable Procurement: Government guidelines promoting MSME and women-led business participation in public procurement.

These initiatives are expected to stimulate private investment, foster innovation, and accelerate Indonesia’s transition to a low-carbon, high-value economy.

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Building on Earlier Reforms and Post-Pandemic Recovery

CITA’s earlier phases laid the groundwork for these reforms. Under Subprograms 1 and 2, approved in October 2021 and September 2023, ADB supported Indonesia’s economic recovery from the COVID-19 pandemic by advancing trade facilitation, improving logistics, and creating digital platforms to streamline government services.

Notable achievements include:

• The launch of an online licensing platform that cut approval times and improved transparency.

• Implementation of a National Logistics System Plan to reduce bottlenecks and enhance supply chain efficiency.

• Establishment of a Single Window System simplifying customs procedures and international trade documentation.

Subprogram 3 builds on this momentum to consolidate Indonesia’s position as a regional hub for green investment and innovation.

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Promoting Gender Equality and Financial Inclusion

A major highlight of the new subprogram is its focus on women entrepreneurs and gender-responsive financial reform. Indonesia became the second country globally to adopt the Women Entrepreneurs Finance Code, a global framework encouraging banks and financial institutions to expand lending to women-owned enterprises.

This milestone reinforces ADB’s commitment to inclusive growth, recognizing that women-led MSMEs play a vital role in innovation, job creation, and community development. By improving access to finance, training, and markets, the program aims to enhance women’s participation across Indonesia’s industrial and trade sectors.

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Supporting Indonesia’s 2045 Vision

The CITA program aligns closely with Indonesia’s Vision 2045 and its upcoming National Medium-Term Development Plan (2025–2029). Both frameworks emphasize the importance of industrial transformation, sustainable infrastructure, and digital innovation as pathways to economic resilience.

The program is also a cornerstone of ADB’s Country Partnership Strategy (2025–2029) for Indonesia, particularly its strategic pathway on advancing economic competitiveness and inclusive green growth.

By deepening reforms that expand productivity, reduce emissions, and empower local enterprises, the program reinforces Indonesia’s ambition to become a diversified, sustainable, and globally competitive economy.

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Toward a Greener and More Competitive Future

The $500 million loan marks another significant milestone in ADB’s long-standing partnership with Indonesia. By promoting green industry, supporting SMEs, and modernizing trade infrastructure, the CITA Subprogram 3 is set to drive a transformative shift toward sustainability and inclusivity.

Through continued collaboration between government, private sector, and development partners, Indonesia is steadily building the foundation for a resilient and competitive economy by 2045, positioning itself as a key driver of sustainable growth in the Asia-Pacific region.