The New Development Bank (NDB) has received a warning from TrendAsia against funding large-scale bioenergy projects in Indonesia. The advisory cites concerns that adequate protections for local communities and the environment may not be possible alongside such financing.
Concerns Over Regulatory Safeguards
The warning centers on the NDB’s practice of relying on national regulatory systems to expedite project approvals. Critics contend that Indonesia’s current legal framework offers insufficient protection for Indigenous peoples, potentially jeopardizing their livelihoods if bioenergy development proceeds without stronger safeguards.
Amalya Reza Oktaviani, Bioenergy Portfolio Manager at Trend Asia, highlighted the risks posed by Indonesia’s regulatory gaps. She pointed to past conflicts, including one in Aceh involving PT Aceh Nusa Indrapuri, whose operating license was revoked by the government in 2022. The company was also implicated in environmental disasters in Sumatra late last year, leading to further permit revocations.
Similar conflicts, according to Oktaviani, have also occurred in West Kalimantan, Gorontalo, West Nusa Tenggara, and Merauke Regency. She stated, “There is a long history of conflict linked to bioenergy concessions in Indonesia,” during the launch of the report ‘The New Development Bank and the Road to Better Safeguards for Communities and a Just Transition’ in Jakarta on January 28, 2026.
Environmental and Legal Challenges
Oktaviani further argued that large-scale bioenergy projects are not a viable solution for the energy transition. She explained that clearing land, especially natural forests, releases significant carbon emissions and requires decades for ecological recovery, effectively negating any carbon offset benefits. She also warned that forest loss leads to the destruction of entire ecosystems.
Concerns were also raised regarding the impact of Indonesia’s Job Creation Law, which critics claim weakens environmental impact assessments and reduces public consultation periods, thereby limiting community involvement in project planning.
NDB’s Role and Indonesia’s Membership
The NDB, founded in 2014 by the BRICS nations, aims to fund infrastructure and sustainable development in emerging economies. Its priority sectors include energy, transportation, water, sanitation, and urban development. As of 2024, the bank’s projects are largely concentrated in India and China, with 27 projects each, followed by Brazil (21), Russia (14), and South Africa (13).
Indonesia joined BRICS in July 2025 and subsequently became an NDB member, seeking to expand its development financing options.
Frequently Asked Questions
What is the primary concern raised by TrendAsia?
TrendAsia advises the NDB not to fund large-scale bioenergy projects in Indonesia due to concerns that adequate protection for local communities and the environment cannot be guaranteed.
What is the Job Creation Law’s potential impact?
Critics argue that the Job Creation Law weakens environmental impact assessment requirements and reduces public consultation, potentially limiting community participation in project planning.
Which countries originally founded the New Development Bank?
The New Development Bank was founded in 2014 by Brazil, India, China, and South Africa.
If the NDB proceeds with funding bioenergy projects in Indonesia, it may face increased scrutiny regarding its environmental and social safeguards. It is also possible that the bank could require stricter adherence to international standards or implement additional monitoring mechanisms. Alternatively, the NDB could prioritize projects in other sectors or countries with more robust regulatory frameworks.
