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As Asia strives to become a global economic power, it faces the dual challenges of infrastructure development and climate change. As floods, typhoons, and other climate-related disasters continue to devastate countries in the region, there is an urgent need to build climate-resilient infrastructure. These events highlight the devastating toll climate change is having on the lives, livelihoods, and economic stability of people in developing Asia.
Asian countries are taking important steps to address these challenges. Indonesia’s disaster risk and financing insurance strategy reflects a broader regional commitment to sustainable growth. Other Asian countries are also recognizing that building infrastructure that can withstand climate change is essential for long-term development.
Asia’s climate-resilient infrastructure efforts are already delivering meaningful social and economic benefits. These projects not only protect vulnerable communities from climate-related disasters, but also create jobs, improve public health, and strengthen economic resilience across the region. High costs, lack of funding, and regulatory complexity remain, but efforts to address these issues are ongoing. There is also growing recognition of the importance of balancing economic growth with environmental sustainability and social inclusion, and of the importance of making all communities part of the region’s journey towards climate resilience.
Globally, Asia has led the way with innovative financing mechanisms and public-private partnerships. But other regions also offer valuable and unique lessons. For example, Africa has advanced its adaptation agenda through the Africa Climate Resilience Investment Facility, while Latin America has focused on climate-related social inclusion through initiatives such as the Economic Commission for Latin America and the Caribbean Strategy on Green Infrastructure. The strategic use of Islamic finance in Asia, particularly through green sukuk (also known as Shariah-compliant bonds), and growing collaboration efforts across ASEAN, particularly in Indonesia and Malaysia, are becoming key differentiators in the global landscape of climate-resilient infrastructure.
Climate-resilient infrastructure requires significant financial resources, and several countries in Asia are exploring innovative financing mechanisms. Indonesia’s landmark green sukuk bond issuance has raised more than US$7 billion since 2018 to fund projects that reduce emissions and promote sustainability, including renewable energy, waste management and reforestation. This success highlights the potential of Islamic finance to align with global climate goals and sets a strong precedent for the region. Malaysia and Bangladesh have similarly begun issuing green sukuk, contributing to regional climate change efforts.
Asian countries are also exploring other innovative financing tools. Indonesia’s Sustainable Development Goals bond and Samurai Blue bond issuances demonstrate the region’s increasing focus on leveraging financial markets for sustainable development. The country’s green taxonomy has also generated productive discussions about the labeling and regulation of climate-related projects. These efforts reflect Asia’s commitment to aligning financial innovation with global climate goals. As the region refines these frameworks, there will be a valuable opportunity to learn from global experience. Africa’s progress in coal phase-out and Latin America’s successful renewable energy transition could serve as a guide for Asia to promote climate resilience.
Private sector involvement in financing climate-resilient infrastructure is essential across Asia. In Indonesia, a mixed finance model managed by PT Sarana Multi Infrastruktur, part of the Ministry of Finance, attracts private investment to support green projects. This approach is also mirrored in countries such as India and the Philippines, where blended finance helps de-risk investments and promote sustainable infrastructure projects.
Measures to strengthen green infrastructure and large-scale projects in line with climate change goals are being implemented across the region. The Indonesia Infrastructure Guarantee Fund reduces investment risks in public-private partnerships and promotes the transition to a green economy. Vietnam and Thailand are similarly developing infrastructure funds and guarantees to attract green investment, marking the region’s transition towards sustainable development.
Governments in Asia are also introducing financial instruments, such as subsidies and tax incentives, to encourage the adoption of new renewable energy technologies. Indonesia’s tax incentives and allowances for renewable energy projects mirror India’s policies, where renewable energy projects benefit from tax incentives. This will reduce the financial burden on investors and accelerate the transition to a low-carbon economy.
Asia’s rich biodiversity is also an important region. From the rainforests of Indonesia to the mangroves of the Mekong Delta, the region’s natural heritage is under threat from deforestation, illegal logging and climate change. Asian countries have introduced strategies similar to Indonesia’s Biodiversity Strategy and Action Plan to protect these ecosystems. A nature debt exchange is also being considered as a way to finance biodiversity conservation, similar to the US$35 million agreement between Indonesia and the US.
Internationally, Asia’s leadership in climate finance is evident through its active engagement with multilateral development banks. Partnerships with the Asian Development Bank and the World Bank, through initiatives such as the Energy Transition Mechanism and the Just Energy Transition Partnership, are essential to scale up investment in renewable energy. Indonesia’s innovative financing mechanism is a scalable and replicable model for other Asian countries.
Cooperation with multilateral development banks will also extend to the development of domestic carbon markets across Asia. Indonesia’s regulatory framework for carbon financing is mirrored in regional initiatives such as China’s national carbon market and Japan’s voluntary emissions trading scheme. These initiatives will create transparent and trustworthy markets, allowing companies to participate in domestic and international carbon trading.
Asia is also at the forefront of efforts to harmonize sustainable finance standards. The ASEAN Taxonomy is aligned with global frameworks such as the European Union and ensures regional financial flows support sustainable development. This collaboration is important for increasing investor confidence and promoting cross-border green investment.
Asia’s journey towards climate resilient infrastructure is one of innovation, collaboration and leadership. Countries like Indonesia are mobilizing resources, protecting natural heritage, and leading global efforts towards a sustainable future.
As co-chair of the Finance Ministers’ Coalition for Climate Action, Indonesia is working with Asian countries to advance the global sustainability agenda. With support from forums such as the G20, Asia is poised to take the lead towards a resilient and sustainable future. The time for action is now.
Mr. Parziono is Indonesia’s G20 Vice-Minister of Finance and Assistant to the Indonesian Minister of Finance for Macroeconomic and International Finance.
Bobi Wahyu Hernawan is Director of the Center for Climate Change and Multilateral Financial Policy at the Indonesian Ministry of Finance. The views expressed are their own.
