Proceedings of the International Conference on Sustainable Innovation Track Accounting and Management Sciences (ICOSIAMS 2021)

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Dutch Curse on Indonesia: Energy Poverty From Asian Development Bank (ADB) Loans

Authors
Muhammad Amir Ingratubun1, *, Akhmad Fauzi2, R. Nunung Nuryartono3
1,2,3Regional and Rural Development Planning Department, IPB University, Bogor, West Java, Indonesia.
Corresponding Author
Muhammad Amir Ingratubun
Available Online 13 January 2022.
DOI
10.2991/aebmr.k.211225.035How to use a DOI?
Keywords
Development bank; disbursement delays; energy poverty; money creation; negative impact; aid volatility
Abstract

ADB is a multilateral regional development bank similar to the World Bank. It takes an average of over 5-year to disburse the loan funds because of conditionalities compared with one day by commercial banks. During which, the funds stay in the banks and gain compounded interest. Development studies have mostly overlooked these gains and their impacts. ADB loans attribute about 0.3% of Indonesia’s energy poverty, we reviewed the disbursement delay impacts on energy poverty involving 35 ADB energy loan projects with over $5.2 billion from 1971 to 2017. We applied a non-econometric method adopting project and portfolio management principles. With average ADB energy loans to Indonesia of 0.127% of GDP, the results showed ADB loans initially helped Indonesia reduce energy poverty by 30%, but at 0.006% of GDP increasing it back and continues to aggravate beyond 0.127% of GDP by 60%. This exhibits that for each 1% of GDP increase in ADB loans, they increase 8% energy poverty. Disbursement delays worsen this to 11%. Because of this, Indonesia suffers Dutch disease going in reverse which we term as Dutch Curse because of historical colonial connection. Indonesia suffers a capital loss of over $12 per $1 loan or equivalent to 1.52% of GDP. Monetizing these, could finance electricity access improvement for 1.75 million poor households, provide a subsidy, and help eliminate SAIDI/SAIFI. Despite it is easy, it requires a fundamental change to fix this.

Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the International Conference on Sustainable Innovation Track Accounting and Management Sciences (ICOSIAMS 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
13 January 2022
ISBN
978-94-6239-504-6
ISSN
2352-5428
DOI
10.2991/aebmr.k.211225.035How to use a DOI?
Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

risenwbib
TY  - CONF
AU  - Muhammad Amir Ingratubun
AU  - Akhmad Fauzi
AU  - R. Nunung Nuryartono
PY  - 2022
DA  - 2022/01/13
TI  - Dutch Curse on Indonesia: Energy Poverty From Asian Development Bank (ADB) Loans
BT  - Proceedings of the International Conference on Sustainable Innovation Track Accounting and Management Sciences (ICOSIAMS 2021)
PB  - Atlantis Press
SP  - 247
EP  - 257
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211225.035
DO  - 10.2991/aebmr.k.211225.035
ID  - Ingratubun2022
ER  -