The Financial Services Authority (OJK) and the banking industry have\nbeen urged to strengthen supervision of financing for companies in the\nplantation and forestry sectors that carry forest and land fire\n(karhutla) risks. The call was made by House of Representatives\nCommission XI member Habib Idrus Salim Aljufri amid widespread forest\nand land fires across many parts of the country.<\/p>\n
According to the Prosperous Justice Party (PKS) politician, a\ncompany\u2019s environmental track record, including repeated fire incidents\nin concession areas, must become an important part of credit risk\nassessment and financing decisions.<\/p>\n
\u201cWe must not allow the state budget to incur large costs to\nextinguish fires on one side, while on the other side financial\ninstitutions continue to provide financing without seriously taking into\naccount the environmental track record of their debtors,\u201d said Habib\nIdrus in a statement quoted on Tuesday (25\/8).<\/p>\n
He stressed that the prudential banking principle must not only\nmeasure a debtor\u2019s financial capacity. Environmental risks that can\ncause economic, legal and reputational losses must also be adequately\ntaken into account.<\/p>\n
Therefore, the OJK needs to ensure that banks and financing\ninstitutions conduct thorough environmental checks before disbursing or\nextending credit to companies in the plantation and forestry\nsectors.<\/p>\n
\u201cThe OJK needs to ensure that sustainable finance principles are\ntruly applied in financing decisions, not merely as administrative\nreports. Companies whose concession areas have repeatedly caught fire\nmust receive stricter financing evaluations,\u201d Habib Idrus asserted.<\/p>\n
He also asked the OJK to provide aggregate data on bank financing to\nthe plantation and forestry sectors, including mitigation measures taken\nagainst high-risk debtors. According to him, transparency is needed so\nthat the public can see the extent to which the financial services\nsector contributes to preventing environmental damage.<\/p>\n
However, he said, tightening measures against problematic companies\nmust not restrict access to financing for smallholder farmers and\nordinary people. The government, together with the OJK and banks, needs\nto expand affordable credit for farmers who practise land clearing\nwithout burning, social forestry, land restoration, and environmentally\nfriendly business activities.<\/p>\n
\u201cFinancing must have a clear direction: stricter towards those who\ncause damage and easier for communities that protect the environment.\nSmallholder farmers who want to switch to land management without\nburning must receive technological support and access to capital,\u201d he\nsaid.<\/p>\n
Habib Idrus believes that sustainable financing policy must be able\nto create real incentives and disincentives. Responsible business actors\nshould receive better access to financing, while companies that ignore\nenvironmental risks must face firm evaluations.<\/p>\n
\u201cThe financial sector has great power to direct business behaviour.\nTherefore, banks must not merely be spectators in handling forest and\nland fires. Financing must become an instrument to protect the\nenvironment while also safeguarding the economy and society,\u201d Habib\nIdrus concluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/financing-for-companies-with-forest-fire-risk-must-be-tightened-1787633418", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }