Jakarta, Indonesia, March 8, 2020 —IFC, a member of the World Bank Group, has announced an investment of up to IDR 2.75 trillion (equivalent to $200 million), in privately-placed gender and green bonds issued by Bank OCBC NISP as part of the bank’s Sustainability Bond Program. The proceeds from the gender bond will enable the bank to increase lending to women entrepreneurs and women-owned small and medium enterprises (WSMEs). The green bond will support the bank to expand green financing, particularly development of green projects and financing of green mortgages.
Bank OCBC NISP’s gender bond is the first ever in Indonesia, and second in Asia-Pacific, following Bank of Ayudhya’s Gender Bond issuance in 2019, also supported by IFC. The bank’s green bond, also fully sponsored by IFC, follows a successful first project in 2018, which has been fully deployed. With this new project, Bank OCBC NISP is expected to further grow its sustainable portfolio.
WSMEs play a central role in the nation’s economy, with women owning 34 percent of medium enterprises and 50 percent of small businesses. Yet, according to IFC’s MSME Financing Gap Study (2017), Indonesian WSMEs face a $60 billion financing gap. Approximately, 40 percent of WSMEs in the country are financially constrained, and 17 percent of women-owned firms perceive financing as a major growth constraint.
“Increasing women’s participation in the Indonesian economy and reducing the gender gap is part of IFC’s core strategy in Indonesia. Investing in Bank OCBC NISP’s Sustainable Bond Program, which aims to empower women entrepreneurs and WSMEs in addition to catalyzing green projects, demonstrates IFC’s commitment towards Indonesia’s sustainable economic growth,” said Azam Khan, IFC Country Manager for Indonesia, Malaysia, and Timor Leste.
As an archipelago nation and following decades of rapid carbon-intensive growth, Indonesia is vulnerable to climate change impacts. Green financing is therefore critical to help the country meet its greenhouse gas emission reduction targets — 29 percent by 2030. In this context, IFC estimates that Indonesia’s green financing opportunities could be as high as $274 billion between 2016 and 2030.
“As a pioneer bank in sustainable financing for green projects in Indonesia, IFC’s extension funds will help us continue our efforts to provide financing for green projects to reduce climate change footprint. In addition, this fund will also be used to empower women to build sustainable businesses. This initiative is one of our efforts to move business process towards sustainable development and ensure a better future for the next generations,” said Parwati Surjaudaja, President Director of Bank OCBC NISP.
As part of the project, IFC will partner with the bank to provide training to the bank’s staff as well as Indonesian property developers on green buildings. The bank will also work with IFC to develop a targeted approach to support the growth of women entrepreneurs. Apart from demonstrating the viability of WSMEs as a distinct customer segment, the project aims to support the government's efforts to establish climate finance as a distinct asset class.
The gender bond is supported by the Women Entrepreneurs Finance Initiative (We-Fi) program and is aligned with the government of Indonesia’s development goals to reduce Indonesia’s gender gap.
The green bond, which has green building as one of the key priority segment, is supported by the United Kingdom government’s Market Accelerator Green Construction Program, aimed to promote market shifts towards green construction and support green mortgages development. This initiative is also in line with the recent policy incentives for green mortgages issued by Bank Indonesia.
In 2014, IFC and Indonesia’s Financial Services Authority (OJK) established a cooperation to improve regulatory frameworks leading to the issuance of OJK Regulation (POJK 51/2017) on Sustainable Finance for Financial Institutions. The regulation aims to transform the country’s financial sector towards more sustainable practices.
Since 2005, IFC has provided more than $24 billion in long-term financing for climate-related projects in addition to nearly $19 billion in core mobilization. In FY19, IFC’s own account volume was $2.6 billion and its core mobilization reached $3.2 billion. IFC’s climate investments in FY19 were spread across 93 deals, helping avoid an equivalent of 15.5 million tons of carbon dioxide emissions.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
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About We-Fi
The Women Entrepreneurs Finance Initiative (We-Fi) is a collaborative partnership among the 14 governments that have made financial contributions, eight multilateral development banks that serve as implementing partners, and other public and private stakeholders. We-Fi was formally established in October 2017 as a Financial Intermediary Fund hosted by the World Bank. We-Fi invests in programs and projects that help unlock billions of dollars in financing to address the full range of barriers facing women entrepreneurs—increasing access to finance, markets, technology, and mentoring, while strengthening policy, legal and regulatory frameworks. As one of the We-Fi Implementing Partners, IFC supports private sector clients with investment and advisory services to expand financial services and market access for women-owned/led firms, as well as increasing the capacity of women entrepreneurs to run high-growth businesses. For more information, visit www.we-fi.org .
About Bank OCBC NISP
Bank OCBC NISP was established in Bandung in 1941 under the name Nederlandsch Indische Spaar en Bank Deposit. As of December 31, 2019, Bank OCBC NISP serves its customers through 283 office networks in 57 cities in Indonesia, equipped with 669 Bank OCBC NISP ATM units that can be accessed in more than 195,000 ATM networks in Indonesia, as well as connected with more than 766 OCBC ATM networks Groups in Singapore and Malaysia. Bank OCBC NISP also serves its customers through digital channels, including mobile banking and internet banking, both for individual and corporate. Bank OCBC NISP received an idAAA (stable) rating from PT Pemeringkat Efek Indonesia (PEFINDO) and AAA (idn) / stable from PT Fitch Ratings Indonesia.
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