Problem overview:

     Policies and measures: To develop an institutional support to SME in handling environmental problem caused by their production process through incentives systems, IEPC loan was established for SMEs to use in their environmental investment.

     Integrating all stakeholders: The IEPC-project is a pilot project established by the Indonesian government and the cooperation from various organizations, both private and public.

Background in summary:

     What is Revolving Fund: Revolving Fund is the fund that use to refinance environmental investment loans. The revolving fund provides environmental investment loans to SME such as industrials, hospitals and hotels, which own less than 8 billion Rupiah in operating assets (all their assets minus the value of land and buildings).

     What type of investments activities are being finance by the project:

1. Investments in production facilities aiming at substantial pollution reduction and/or natural resource saving by financing of more efficient and cleaner production equipment/process technologies (cleaner and production investments)
   
   
2. Investments in machinery and equipment to be used by the SME to recycle, reuse and recover (3R) waste materials and waste products
   
   
3. Investment in waste treatment plants and equipment to reduce and neutralize industrial waste and pollution after the production process (end-of-pipe solutions)
   
   

     Financial Source of the Project: Grant of DM 15.6 million from Government of Germany to Government of Indonesia to finance 3 components as follows:

1. To finance institution of revolving fund to refinance environmental investment loans primarily to SME
   
   
2. To finance cost of Technical Assistance Unit (TAU)
   
   
3. To finance equipment necessary for the treatment of slaughter house residues
   
   

     Who is the implementing agency: Ministry of Environment.

     Major Stakeholders: Ministry of Environment, Ministry of Finance, KPKN VI, Participating Banks and IEPC-TAU

See also: Indonesia example: Industrial Efficiency and Pollution Control Project (IEPC-project)

Peer Review Committee Good practice rating: (1 for the best, 5 for the lowest score)
Sustainability		Efficiency
2	Improvement in either the environment of economic condition with no harm to the other.	3	Cost efficient.
3	Sustainable over time (not one-off)	Process
Adaptability		3	Participation of the community
2	Location adaptability (can the project be done in other places?)	2	Participation of resource owners/users
2	Socio-cultural adaptability.	2	Partnerships between various actors (Governments, NGO, Academia, Private)
3	Level of development adaptability.	2	Degree of coordination and cooperation between government departments.
3	Style of government adaptability.	2	Ability to attract political interest/support
2	Degree of decentralization adaptability.	-	Procedures for feedback and review.
Comments on this example:      More funds should be provides for environmental SME investments. MoF should invite additional participating banks to implement IEPC in order to have better regional coverage combined with faster project implementation. Some additional provincial owned banks should become participating banks.      This is an example of policies that directly deal with the industries (in particular SMEs) and provide incentives to invest on environment improvement Sustainability of the project:      Sustainable over time: Sustainability of these projects are often subject to the availability of funds. Question arises as to whether such projects are driven by availability of financial resources, rather than the demand from the society. If that is the case, there is a risk of creating a fake demand attracted by availability of funds. Adaptability of the project to other situations:   Process of decision making and implementation:      One of the most important factors for this project is the monitoring process. In this case, because the fund is provided in term of loan, the success and effectiveness of the project rely mainly on the usage of loan of SMEs and also their performances. The involvement of local government for monitoring can play an important role in this process.      Ability to attract political support: Such projects can often be politically popular as the government pursues the result in short term. Stakeholders such as communities or SMEs will also welcome them when they are the beneficiaries and recipients of the project funds.      Integrating all stakeholders: IEPC project needs cooperation from various stakeholders ,for example, Government of Germany, MoE, MoF, KPKN VI, participating private banks and IEPC-TAU. The TAU consultants shall provide technical assistance to the participating banks' credit analysts in order to speed up the technical appraisal process across Indonesia. Cost efficiency: