Faith In Finance: Indonesia's Innovative Path To Sustainable Development
These efforts have been supported by development partners, including the United Nations.
Putut Hari Satyaka, is the Deputy Minister for Development Financing and Investment at Indonesia's Ministry of National Development Planning (Bappenas). He spoke to UN News ahead of a key UN conference on financing for development which begins in Sevilla on 30 June.
UN News: How much money is needed in Indonesia to achieve the SDGs and what is your estimated funding gap?
Putut Hari Satyaka: The existence of an SDG financing gap remains a significant challenge, especially to developing countries. Indonesia is no exception. The financing gap to fully achieve all 17 goals and their targets remains significant. With an estimated $4.2 trillion needed for Indonesia to achieve the SDGs, there is a $1.7 trillion financing gap that is yet to be resolved.
UN News: How can that gap be closed?
Putut Hari Satyaka: We need an integrated and transformative approach, going beyond 'business as usual'. For us, this means two things.
Firstly, we must enhance the use of public finances to be more efficient, resilient and transparent. This includes improving budgetary alignment with SDG targets, strengthening expenditure efficiency, and ensuring that resources are effectively prioritized and utilized for sectors generating spill-over transformative effects to sustainable development.
Secondly, we must be creative and innovative – meaning that we need to scale up the existing innovative financing methods and explore new ones. Some of the most prominent instruments and approaches are blended finance, thematic bonds and faith-based financing.
Indonesia has been making great progress in this regard. We have created an ecosystem of a wide range of innovative instruments, attracting a diverse range of stakeholders and entities, supporting necessary regulations, and developing the enabling environment to nurture the market.
UN News: What is faith-based financing and what has been Indonesia's experience so far?
Putut Hari Satyaka: Faith-based financing, especially within the Indonesian context, refers to financial practices grounded in religious principles, most notably, in the principles of Sharia law in Islam.
As Indonesia has 241.5 million Muslims, 85 per cent of the population, and faith-based social financing like zakat and waqf have been a long-standing practice, deeply rooted in our society.
What is new is the allocation of these instruments towards the SDGs. Indonesia has made strong progress in advancing Sharia finance as part of its inclusive growth agenda.
Sharia financing is now growing by 14 per cent a year, outpacing conventional finance. We are also championing scaling-up, green sukuk, which is a Sharia-compliant bond specifically issued to finance environmentally friendly projects.
This reflects Indonesia's strong commitment to building a competitive financial ecosystem for faith-based instruments, and we will continue to strengthen collaboration, drive innovation, and ensure that faith-based financing plays a central role in our economic development.
UN News: Are you able to raise new funding through these faith-based instruments? Critics sometimes say this is just another way to reach the same funds you could get otherwise.
Putut Hari Satyaka: Yes, we are. With the world's largest Muslim population, there is a massive potential in channeling faith-based financing towards the SDGs.
In 2018, Indonesia issued the world's first sovereign green sukuk, raising $1.25 billion to fund renewable energy and climate adaptation projects.
Between 2019 and 2023, the government raised approximately $1.4 billion through domestic retail green sukuk, engaging individual investors in climate financing. This demonstrates the strong potential of green sukuk, both domestically and internationally.
We also see great potential in Islamic Social Financing. Indonesia's zakat potential is estimated at between $18 billion and $25 billion per year. The actual collection remains below 5 per cent of that potential, so there is clearly a vast opportunity to strengthen social finance.
UN News: What lessons have you learned over the years and what advice do you have for national or subnational governments interested in faith-based financing?
Putut Hari Satyaka: Although we have made great progress in faith-based financing, we have much room for enhancement, improvement and even exploration. Here are a few potential lessons:
First and foremost, awareness raising is key. As many view faith-based financing also as community-based financing, society's participation in these instruments starts with their understanding of their importance and the way the money will be used.
Secondly, we see that the close coordination and concerted actions of relevant stakeholders are crucial. Overlaps are unavoidable without proper coordination. It is coordination – including with subnational governments, where we see room for improvement in order to scale-up faith-based financing in Indonesia.
Finally, building trust takes time. Faith-based financing relies heavily on public confidence, both in the institutions managing the funds and in how the funds are used.
Just like many other financing instruments, we have learned that transparency, accountability and consistent communication are essential to earn and maintain that trust.
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US representatives, including Aryeh Lightstone, an official who now works with Trump's special envoy Steve Witkoff and formerly served as an aide to David Friedman when he was US ambassador to Israel, courted UN and humanitarian partners to sign on to the plan. But opposition to the plan had grown. The UN and most aid partners refused, publicly denouncing the proposal as immoral and designed to further Israel's war plans against Hamas by 'militarising' assistance to more than a million civilians corralled into ever-shrinking 'safe zones' demarcated by the IDF in southern Gaza. Neither Beasley nor Blair agreed to sign on. On May 22, newly named GHF executive director Jake Wood, a US Marine veteran and co-founding board chair of Team Rubicon, a humanitarian organisation that operated in disaster zones, released a letter he had sent to COGAT, the Israeli Government co-ordinator for Gaza and the occupied West Bank. Its purpose, he wrote, was to confirm 'our understandings of agreements' - including an understanding that aid agencies would also be permitted to distribute food and medical assistance under 'existing' humanitarian mechanisms, outside the GHF programme. 'GHF acknowledges that we do not possess the technical capacity or field infrastructure to manage such distributions independently,' he wrote, suggesting that the new aid mechanism should complement, but not replace, Gaza's existing aid sector. The night before the scheduled May 26 launch, Wood unsuccessfully sought to persuade the IDF to delay the start date by at least a week amid unanswered questions about funding, the participation of other agencies and the nearby positioning of Israeli troops. Wood resigned, and the next day, UG contractors accompanied the first convoys of GHF food into Gaza. Some of the plans, he said in a statement, were not consistent with 'humanitarian principles of humanity, neutrality, impartiality and independence'. David Burke, a fellow Marine veteran and former Team Rubicon colleague who had been named GHF chief operating officer, also resigned. Burke and Wood did not respond to inquiries from the Washington Post. The GHF promoted John Acree, a former official with the US Agency for International Development originally named head of the GHF operations inside Gaza, to interim executive director of the foundation. The opening of the sites brought new problems, with tens of thousands of despairing Gazans surging towards promised food. In the first week of GHF's operations, witnesses said that Israeli troops shot in the direction of Palestinians queuing outside the fenced distribution sites at least three times. UG contractors voiced concerns about the rules of engagement of nearby IDF troops and the safety of the Palestinians, according to several people familiar with the site operations. Paid Palestinian volunteers working at the GHF sites were receiving death threats from Hamas for participating in the Israeli-backed plan. Volunteers were afraid to travel back to their families at night, but the financial planners had not budgeted to provide them with housing, running water or other supplies to stay on-site, one person said. 'There were number crunchers at every stage, asking why do we have to do this stuff,' said another person familiar with the conversations between BCG financial consultants and SRS planners. Contractors purchased some provisions for the workers out of their own pockets, the person said. The limited number of trucks that passed through the Kerem Shalom crossing into Gaza each day to the sites after Israeli inspection meant that supplies ran out too early, leaving thousands empty-handed, angry, and disbelieving there was no more food to be had. On May 30, BCG abruptly withdrew from the project. Amid what several people familiar with the situation said was internal criticism of perceived anti-Palestinian initiatives, the company said that members of its team had undertaken 'unauthorised' efforts on post-war planning. Two senior partners, it said in a statement, had been 'exited ... from the firm' and BCG 'has not and will not be paid for any of their work.' The end game Despite ongoing problems and frequent reports of gunfire nearby, the GHF food programme achieved a rhythm of sorts after a few weeks. News releases provided a daily accounting of tens of thousands of boxes of pasta, lentils, cooking oil and other commodities it distributed. But the killing of civilians in the vicinity of GHF sites has continued. Last month, eight Palestinian volunteers were shot and killed, allegedly by Hamas, aboard a bus returning them to GHF sites after visiting their families. Early this month, this IDF said 'terrorists' had tossed grenades into a distribution site, injuring two American contractors. Then came the deaths in last Wednesday's stampede. 'We came to Gaza to help feed people, not to fight a narrative war,' GHF spokesman Chapin Fay told reporters hours after the stampede deaths, publicly accusing Hamas of causing the carnage by showing up at the site with guns. Aid organisations said it was the predicted result of Israeli militarisation of what should be a neutral endeavour. On Sunday local time, at least 79 Palestinians were killed when food-seeking crowds mobbed a UN aid convoy in the northern part of the enclave and were fired on by Israeli troops, according to Gaza health authorities and witnesses. The IDF said it was 'aware of the claim' and that details of the event were 'being examined'. Acree, the GHF interim executive director, repeated appeals to the UN and other aid organisations to co-operate with the foundation. 'The demand for food is relentless, and so is our commitment,' he said in a statement. 'We're adjusting our operations in real time to keep people safe and informed, and we stand ready to partner with other organisations to scale up and deliver more meals to the people of Gaza.' GHF contracts expire at the end of August, unless a ceasefire comes first. If and when the fighting stops, it remains unclear how much aid will be allowed into Gaza and who will distribute it. Since late June, Trump has said repeatedly that negotiations were going well and that a truce was imminent.
