Indonesia’s abundant forest resources form a crucial foundation for the development of nature-based carbon markets. (Photo: iStock)
As Indonesia advances toward its vision of becoming a high-income nation by 2045, climate action is not only an environmental imperative — it is a central pillar of our national development strategy. Indonesia believes economic growth and environmental stewardship can and must move forward together.
At the heart of this vision stands Indonesia's forestry sector.
Indonesia is home to the third largest tropical forest ecosystem on Earth, spanning more than 120 million hectares and covering over 60 percent of our land area. These forests are among the world’s most important natural assets, storing vast amounts of carbon, sustaining globally significant biodiversity, regulating water systems, and supporting the livelihoods of millions of Indonesians, including indigenous and customary (“adat”) communities that have protected forests for generations.
Indonesia's forests are not only national treasures; they are strategic global assets in the fight against climate change.
Over the last decade, Indonesia has demonstrated that protecting forests while pursuing economic growth is achievable. Through stronger governance, improved law enforcement, sustainable forest management, social forestry programs, peatland and mangrove restoration, and measures to reduce deforestation and forest degradation, Indonesia has delivered meaningful progress toward building a more sustainable forestry future.
Indonesia has also become home to one of the world’s largest social forestry initiatives, empowering local communities to manage forests sustainably while generating economic opportunities. This approach reflects our belief that conservation succeeds when communities prosper alongside nature.
At the same time, Indonesia continues to strengthen restoration efforts across critical ecosystems, including mangrove rehabilitation and landscape restoration programs that deliver climate benefits while improving resilience for coastal and forest communities.
Yet sustaining this progress requires long-term financing at scale. Public funding alone will not be sufficient. Private investment must become an increasingly important partner in protecting forests and accelerating sustainable development.
This is where carbon markets can play a transformative role.
Carbon credit markets offer one of the most promising opportunities to align economic incentives with conservation outcomes — mobilising finance toward forest protection, ecosystem restoration, biodiversity conservation, and nature-based climate solutions.
For forest-rich countries like Indonesia, carbon credit markets are not simply financial instruments. They represent an opportunity to unlock the economic value of environmental stewardship, translating natural capital into green investment, jobs, innovation, and sustainable prosperity.
Recognising this opportunity, Indonesia has begun operationalising forest-based carbon market initiatives across priority landscapes as part of our broader green development agenda.
Indonesia is building carbon market infrastructure designed around integrity, transparency, accountability, and long-term market confidence. Our vision is clear: Indonesia’s forestry sector must become a global leader in delivering high-integrity forest carbon solutions.
However, carbon markets can only realise their full potential through international cooperation.
Carbon credit markets are inherently global. Carbon credits generated through forest conservation and restoration efforts in Indonesia may support climate commitments made by businesses across Asia, Europe, and the Americas. Without shared standards, aligned frameworks, and coordinated government leadership, markets risk fragmentation and reduced confidence.
This is why Indonesia has joined The Coalition to Grow Carbon Markets.
Indonesia joins this coalition of 12 forward-looking governments — representing both emerging and advanced economies — because we believe high-integrity carbon markets can become one of the world’s most powerful tools to mobilise climate finance while creating sustainable economic opportunities.
For Indonesia, this means creating pathways to attract investment into forests, strengthen rural economies, create green jobs, and reinforce the forestry sector as a driver of national growth.
The Coalition is focused on three strategic priorities.
First, strengthening clear, credible, and stable policy frameworks that build confidence among investors, project developers, and businesses seeking high-integrity carbon credits.
Indonesia is actively strengthening governance frameworks for forest carbon trading to improve transparency, accountability, inclusiveness, and environmental integrity. Recent regulatory developments reinforce Indonesia’s commitment to building carbon markets that deliver genuine climate outcomes while supporting sustainable development. Through the Coalition, Indonesia aims to reinforce its commitment to developing high-integrity carbon markets, in line with the Coalition’s Shared Principles.
Second, reducing investment barriers by strengthening the legal, financial, and contractual foundations necessary for mature carbon markets.
Indonesia is already advancing efforts to consolidate carbon registries into a unified national platform that improves transparency, reduces transaction costs, increases liquidity, and enhances investor confidence. Stronger market infrastructure will help convert forest carbon assets into reliable financing for conservation, restoration, biodiversity protection, and climate resilience.
Finally, ensuring that market development reflects practical business realities. The Coalition is working in ongoing dialogue with business to ensure government action is informed by real business experience and needs.
The world will not meet its climate goals without significantly greater investment into activities that cut emissions quickly and at scale, including nature-based solutions.
Some of the greatest opportunities exist within the world’s forests.
Indonesia’s forestry sector is uniquely positioned to help deliver those solutions.
With vast tropical forests, globally important biodiversity, extensive mangrove ecosystems, strong community forestry programs, and growing climate leadership, Indonesia is demonstrating that forests are not barriers to development — they are engines of sustainable growth.
For Indonesia, forestry leadership means protecting biodiversity while creating jobs. Conserving forests while strengthening communities. We are working with like-minded governments around the world to advance climate ambition while driving economic transformation.
As Southeast Asia’s largest economy and one of the world’s most important forest nations, Indonesia is committed to proving that protecting forests and growing prosperity are not competing objectives.
They are the foundation of our future.
