Indonesia is facing a defining question: can it continue to grow its economy while making the shift towards a greener future? In this episode of Cleaning Up, guest host Marie Cheong speaks with Sandiaga Uno, chair of Mutuagung Lestari International and former Deputy Governor of Jakarta and Minister of Tourism, about Indonesia’s potential to become a major player in the green economy, and why the country’s natural resources, growing energy needs and entrepreneurial ecosystem could create significant opportunities for climate solutions and investment.
They explore whether green investing could be the next major growth opportunity, why the economics need to stack up, and how moving beyond the idea of a “green premium” towards “green discounts” could make sustainable business models more competitive. From the challenge of moving away from coal while meeting rising energy demand, to the potential of carbon credits and nature-based solutions, the conversation looks at what it will take to turn Indonesia’s green potential into real economic and environmental value and what investors should consider before taking the plunge.
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Chapters
00:00 Intro
00:51 About Indonesia
13:03 Saratoga’s Evolution
20:47 Green Discounts
26:18 Energy Transition
32:08 Rising Energy Demand
37:14 Growth and Policy
43:23 Carbon Credits
52:33 Nature-Based Solutions
55:21 Climate Investing
01:02:31 Outro
Sandiaga Uno
We are only seeing the tip of the iceberg. There's a lot of opportunity. I think the transformations is they're just pretty much like AI. People are seeing AI is just at the beginning of a very major super cycle, the green economy is experiencing the same, although we're not getting the same type of valuations like the NVIDIAs.
Marie Cheong
Not yet, not yet.
SU
But we believe the next NVIDIAs of the world will be produced by companies that focus on green economies, and I hope Indonesia will play a major role.
MC
Hello, I'm Marie Cheong, and this is Cleaning Up. I run an early stage climate tech venture capital firm for South and Southeast Asia, and in the episodes that I guest host, I'll do my best to showcase what the green transition looks like in my part of the world. Today, I'm in Jakarta, the capital of Indonesia, the largest economy in Southeast Asia. With a young population of over 300 million people and an ever expanding middle class, Indonesia is one of the region's most exciting and vibrant economies. It is also a very resource focused economy, Indonesia is the world's largest exporter of coal, which still supplies more than 60% of its electricity. It's also the world's largest producer of palm oil and nickel.
Indonesia is rich in natural capital, it holds the third largest tropical rainforest on the planet, and its peatlands, mangroves and rainforests are estimated to be able to sequester over 100 billion tons of carbon dioxide equivalent. My guest today is one of Indonesia's best known entrepreneurs and public figures and has seen Indonesia's economy from almost every different angle. In the depths of the Asian financial crisis in the ‘90s, he co-founded Saratoga, which grew into one of Indonesia's largest listed investment companies with stakes in copper, coal, nickel, telecom towers, and most recently, climate businesses like rooftop solar.
He then moved into public life, serving as the Deputy Governor of Jakarta and then Minister of Tourism and the Creative Economy from 2020 to 2024. Most recently, he became chair of Mutuagung Lestari International, a certification company expanding into carbon verification, please welcome Sandiaga Uno to Cleaning Up. Pak Sandi, thank you so much for joining us on Cleaning Up.
SU
Thank you, thank you very much for inviting me to this wonderful podcast.
SU
So we're going to start with the standard Cleaning Up question, which is, in your own words, who are you and what do you do?
SU
I'm Sandiaga Salahuddin Uno, accidental entrepreneur, I was not really heading into entrepreneurship until the ‘97 crisis. I started my company from just three people, and over the last almost 30 years, we developed a portfolio of companies that provide employment to 30,000 Indonesians, and we're just beginning. And we have great opportunities to move into different type of economy, in particular, green economy. I had 10 years plus minus experience in the government and politics, thank God I'm back into private sectors.
SU
Back into entrepreneurship.
SU
Back to entrepreneurship. Politics is quite challenging, in particular for maintaining your impact and portfolio net worth. But I'm glad I had a chance to be on the other side of the spectrum, being in the public sector, and I think we learn a lot now how to provide a 360 collaboration. So I'm just beginning into my third chapter of life, so first chapter being professional, second chapter being the entrepreneurial survival and then going into politics, and now we're focusing on impact.
SU
And I mean, I should say you're being a little bit modest. So we'll go into Saratoga, but when I was looking this morning, it's a net asset value of about US$3 billion. So a very, very sizable portfolio. And we'll also cover it later on in the podcast, but you were Minister for Tourism and the Creative Economy during the COVID years. So a very, very challenging time, and you helped to see Indonesia and Indonesia's tourism industry through that crisis. So I think lots and lots to cover today. But for the listeners, so most of the listeners for Cleaning Up as I mentioned are in the US and they're in Europe, so they might not be so familiar with Indonesia. So my first question is really, how would you describe your country? And what are some of the headwinds? What are some of the tailwinds that it faces today?
SU
Well, Indonesia is, I remember when I started my business almost 30 years ago, we just had a crisis. And we were trying to facilitate investments coming into Indonesia, in particular in relations to building up the various sectors post financial crisis. And we believe at that time we still had the right fundamentals. We're transitioning into democracy, we are just emerged from not only the economic crisis, but the political crisis, it's multidimensional. So we hired a very well-known consultant from a very established firm, and I remember, and I quote, he said, “it's going to be very difficult for Indonesia to survive because you guys are too big, you have 17,000 islands, there are about 300, 400 ethnicities, 700 languages, and you're entering into a full fledged democracy at a sub 1,000 GDP per capita. It's not going to work”, I remember. So we persevere and we continue walking the path of reform and the transformations of our economies. We went into the direct presidential elections, first time in the country's history in 2004.
And now we're in 2026, it is a $1 trillion economy, it's continuing for better, for good, the democratic path. And I think I'm trying to look for that consultant who said that we're not going to make it. We're going to be Balkanised, it's going to be like two or three different countries, but we're still together. And I'm so proud being in that journey and the transformations, being in the private sectors, serving the government also from the political spectrum. And now back into focusing on impact. So Indonesia, largest archipelago, full fledged democracy and very diverse, but the strength of the nations is the unity and diversity. And I think our founding fathers made it very clear that our role in the international sphere should be focused on being active, but also being independent.
SU
It's incredible because I think it's easy to forget that everything that we see in Jakarta, all of the infrastructure, all of the development, that's like just one generation old, right? It's just 30 years where so much of this was built. And Indonesia is still growing 5% year on year, which is faster than most of the rest of the world. So I think it's an incredible amount that's been achieved in a very short period of time. And you still have a very young population, right? So you have the demographic tailwinds that are really carrying through.
SU
We have more than 50% of our population is about the age of 30, so Gen Z rules here. And it's quite challenging for the government to sort of make themselves look relevant in particular with the challenges and what Gen Z is really focused on. And we believe it is our strength that we have a young demography. We're quite productive, I think, leading towards 2045, which we will celebrate our 100 years anniversary being a nation. And the goal is to develop our nations to ensure that jobs are created, and we focus on prosperity for the people. The middle class is still growing, we're teaming up with private sectors and the government and all the stakeholders to ensure that we take care of the education of the people, health, which is actually opening up new business opportunities. The green economy is shaping up very, very, I think, vibrant. We see companies investing into the green economic space. The digitalisation of the economy is tremendous, we saw how now the younger generation is pushing into a much more efficient economy through digitalisation and wellness. The health, I would say healthiness economy is post-COVID really taking off where young generations now embracing more fitter lifestyles. And this will make Indonesia as the anchor economy of Southeast Asia, where the largest economy in Southeast Asia, will spearhead the 600 million populations as a region, and ASEAN being the headquarters in Jakarta would provide a stable in the era of geopolitics. This region still would be considered very stable and playing a pivotal role in terms of moving Southeast Asia as an integrated economy to play alongside China and India as the engine of global growth.
SU
Yes, I think there's a lot of, exactly as you said, a lot of promise for this region. And I was very interested to read recently that you wrote in the Center for International Relations and Sustainable Development that the green economy is indeed going to be one of the pillars of growth for Indonesia. So I want to actually take it to focus a little bit on your journey in Saratoga and Indonesia's, because I would say today, Indonesia is a resource economy, and so the question is, does it have what it takes to move from a resource economy to truly a green economy? And so if I start maybe first with Saratoga, your portfolio is heavily resource weighted, and of course, you've made a lot of money in coal, in mining, how do you think about your portfolio construction today? Will Saratoga ever be able to divest fully from coal as an example?
SU
I founded the company almost 30 years ago, and we just emerged from the Asian financial crisis, so we were in survival mode. So my partner and I, we saw opportunities in terms of how we could bring investments into the country, create economic activities that open up opportunities, and create good quality jobs that brings revenue to the country. So we focus on, because of the Asian financial crisis devalued the rupiah so much, we're looking into industry that produce dollar revenue, mostly our export, and rupiah cost base. So that's where we generate our alpha, the return to investors. And that was the first 5 to 10 years of Saratoga. So we invested, you name it, in plantations, mining, oil and gas, coal, and also minerals that we believe would both have the competitive and the comparative advantage because Indonesia is rich in natural resources. But then we saw another, the next 7 to 10 years of Saratoga, focusing on two other drivers of the Indonesian economy, which is the infrastructure, because post-crisis we need to build the world-class infrastructures to be able to compete with the other economies, and with the other countries, not only in our regions but globally, worldwide. So we start building, in particular, the digital and connectivity infrastructures, infrastructures that provide connectivity. So we started investing in power, we started investing in telecommunications infrastructures, started investing in road infrastructures, such as toll road, and many other infrastructure projects. So that's like the second phase of the portfolio constructions.
And at the same time, as our economy started to really be shaped and being driven by consumptionomics, the basically Indonesia household consumptions contribute more than 55% of our economy. So we're looking into the consumptions, fast-moving consumer goods and services. So that's why we're entering into investing in automotive, in brands, healthcare, including hospitals, we invested in hospitals, starting from 4 or 5 hospitals, all the way to about 20-ish plus. We sold it to the Singapore government two years ago, and we reinvested, because we think healthcare is just maybe only in the second or third year of a 15 to 20-year cycle. And then we started looking into technology, building not just telecom infrastructures, but going into data centers, going into power that fuels the data center's energy requirement. So the portfolio constructions really, I would say, moving from the just plain extractive industries to more creative industries that create values through downstreaming, as well as through basically innovations and technology.
And now Saratoga is sitting at about US$3-4 billion worth of net asset value. I think the team that took over from me when I was spending time in the government have done a good job to double the net asset value in about 10 years, and we believe Saratoga will continue to provide very, very stable above-market performance for their investors. In the meantime, I also look at clusters of economy that maybe now it's too small for US$3-4 billion worth of investment companies such as Saratoga, and we believe the next generations could come to portfolio comprising of three main clusters. And the main clusters are the digital economy, which I think all of Saratoga's companies, portfolio companies, are embracing AI now. And I think the electrification of some of the extractive industries so that our carbon footprint will be reduced would also be very interesting in the next iterations of the investment cycle, and I would say the green economy as a whole. So this is also, I think, should be part and parcel of any portfolio constructions going forward.
SU
Yeah, so it's interesting because indeed it sounds like Saratoga's journey and portfolio sort of mirrors the different phases of Indonesia's growth. And so of course, myself in Climate Tech VC, we watch very closely what investment firms like Saratoga are doing in terms of looking to the future. And so we are very interested, for example, in seeing that you led the US$21 million Series A round for Xurya, which is one of the rooftop solar companies or success stories in Indonesia, but also investments into waste management, battery companies, so interestingly, you mine nickel but you also use it for the production of batteries. So just kind of curious about how you see the green portfolio evolving, will it become a bigger part of your portfolio mix?
SU
I would, there's no other way, we are moving into that direction. This pause that is actually created by different policy generated by the US in particular is, I would say, probably just going to be temporary. I think other countries are continuing to put capital into this and put a lot of resources into moving towards a green economy. And I think I would say Indonesia as a whole is focusing more on the green economy, that's number one. Number two, I think we should be moving away from the notions that in order for you to transform your economies or companies into the green space, it would cost you money.
SU
Yeah. So against the green premium, right? More like a green discount.
SU
I would say green discounts really should be the name of the game. Because if you look at some of the companies that now adopt the greener strategy has benefited from dividends that comes on the efficiencies they created. So waste management, for instance, we believe there's a lot of opportunities in that space. I think the government through Danantara is taking the big role in waste to energy.
SU
Yeah.
SU
So when the government move into that space, we tend as a private sector, and I was part of government before to see, okay, where would be the sector that the government would need more private sectors involvement. So the investments that Saratoga and other investors are making into Xurya, into ecosystem, into forest carbon, we just closed the last round for forest carbon, really is something that we believe is going to spearhead more investment into the green economy. And also privately, in conjunction with the Saratoga interest, I'm also looking into broader space too. Something that is probably smaller, nimbler, something that I have more control and would be able to build into the size and the scale that the firms in the scale of Saratoga could invest.
SU
Can you share, are you talking about Mutuagung?
SU
Yeah, Mutuagung would be a green investment platform that together we are looking to create value out of their existing business, the testing, inspecting and certifications business. And I brought in a number of investors into this investment, not just myself, but I brought in Pak Ridzki Kramadibrata, who is ex-CEO of Grab Indonesia. We brought in ex-CEO of Schroders, these are very, very experienced investors. And we put up a strategy, not only to grow their testing, inspecting and certifications business that focused on green economy, but also new investments, which may or may not include the current Saratoga investments, which we believe could deliver a bigger alpha for us focusing investing in the green economy space.
SU
That's very exciting. So I'm going to come back to MUTU, so in cleaning up, we're not allowed to use acronyms. So MUTU is the short form name for Mutuagung Lestari International, which as Pak Sandi mentioned, is a carbon verification and certification platform, because I really do want to talk about Indonesia's potential for carbon credits, which I think is immense. But before we go to that, I really wanted to touch a little bit about the policy perspective because we don't often get the chance to speak with ex-ministers from the Indonesian government, and you sat in cabinet, as I mentioned, during COVID. You were also there for the launch of the Just Energy Transition Partnership or JETP, which was supposed to help Indonesia transition away from coal. So I guess I'm curious about how do climate and sustainability decisions get made in Jakarta? Is it on the agenda, what are the discussions like? So I would love your perspective on that.
SU
First of all, I think I'm so fortunate to be part of the transitions into the green economy, and I'm seeing all 360 from the private sector side and also from the public sector. And the country is very committed, all the way from Pak SBY era, which I serve as a member of the National Economic Council. And then I joined the cabinet during Pak Jokowi era, I ran with Pak Prabowo on the 2019 presidential elections, so I saw it also from the opposition side. And currently now, Pak Prabowo is spearheading into an interesting space whereby Indonesia plays a very crucial role in terms of leadership into this sector. So the way I look at it, and you mentioned JETP, which was launched in Bali for the G20, and I played a major role into bringing businesses into supporting these transitions, and we were very excited. For the first time, there is a public-private partnership and putting in $20 billion to accelerate these conversions, these transitions, we call it. So much so that I said, at that time we have a coal, not big investments, but quite sizable for us, a coal-fired power plant in the north part of Sulawesi. So this case study showed that even though the bigger scheme of $20 billion is not yet able to be executed for different type of…
SU
It's only $3 billion so far, right?
SU
Only $3 billion. So $3 billion, more than three years already, so that's way punching below the belt, below the weight of what it could really transform into, and there are many power plants here actually ready to jump into the scheme. But we decided while waiting, and maybe we wouldn't qualify for part of this because of the size, this is 2x22.5 megawatt in Gorontalo province, so we decided to shut it down. And it's only 15 years of 35 years...
SU
Lifespan?
SU
Yeah, lifespan of the power plant. And we believe that a private-led without the government and the larger stakeholders' involvement would be able to generate success as well. And 3 years after shutting down the power plant, and because I was in charge of the portfolio, we turned that area into a tourism village. So from a coal-based power plant where they see barges of coal coming in and the power plant is emitting carbon, to complete shutdown, the sea turned into a turquoise color, and lo and behold, we saw whale sharks, school of whale sharks coming in and it becomes the attractions for the tourism village. We call it the tourism village of Botubarani, which now have close to five days waiting list for people to experience the whale sharks that actually you could take pictures in a fiberglass see-through boat. And that is completely priceless in terms of conversion.
So even though we definitely lost money because we're only 15 years out of 35 years of the lifespan so returns is negative, but the impact to the community and the impact, I wouldn't say the impact to the nature, but the community is now actually earning more money from the tourism village than when they get jobs coming in from the power plant. So this is the economics that I think would be unthinkable when we probably started the JETP discussion. So I'm very, very looking forward to deployment of the rest of the $17 billion worth of funding into the transitions. And there are huge power plants here within the vicinity of Jakarta waiting to be converted into a much better ideas into moving from the fossil base into the green economy space.
SU
And I mean, I think that's a very inspiring story, but I just, I want to challenge a little bit just because, you know, Southeast Asia's energy demand is going to more than double in the next 20 years. And you were talking before about the growing middle class households, which of course, you know, they want another car, they want air conditioning for the first time, so there is a big energy need. So how does the government think about balancing that growing need for power, which is good because it fuels growth, versus this need to move away from a reliable, a stable power source like coal? What replaces it?
SU
Well, the current minister is a very good friend of mine and I think the entire cabinet share the same view. Right now, the energy demand is growing because not only from the downstreaming activities that we're doing, more processing activities and the household requirement as well, but data centers, data centers requiring a lot of energies. And as you go into AI, I was telling Eva my team member who used AI a lot, I said, do you know that every time you pose a question to ChatGPT or Gemini, it's the same as boiling two bottle of this. It's close to a kettle of water, same energy that is being used, one prompt. So I think the government understands that, the commitment into transitioning to new and renewable energy is there. But the reality is that now people are just scrambling to whatever fuel supply that they could get. So I was at Gastech conference in Bangkok, whereby I think the notion is let's be practical and let's be pragmatic. I think the oil and gas industry, in particular gas, have a lot of opportunities to grow. And Indonesia just recently made quite a few major discoveries in the gas space.
So we're not just going to be moving away from them. I think we're going to look at how we could utilise the gas for our industrial build-out, but also probably the high-speed diesels fuel power plant could be shut down and the coal could be more focused into, I would say, it no longer is just a dig-dig-ship type of activities, but looking at a more strategic way. And I guess the requirement for data centers could also be coming in from the solar power plant, or any new and renewable energy, we have a lot of geothermal reserves here. So I think the energy mix have to be more progressive in terms of how the government policies could push more private investments that generate not only good return for investors and private sectors, but also would be responsible into shaping our economy more into the green and sort of like the new economy.
Michael Liebreich
Cleaning Up is proud to be supported by its Leadership Circle. The members are Actis, Alcazar Energy, Arup, Climate Imperative Foundation, Copenhagen Infrastructure Partners, Cygnum Capital, Davidson Kempner, EcoPragma Capital, EDP, Eurelectric, KKR, Mitsubishi Heavy Industries, National Grid, Octopus Energy, Quadrature Climate Foundation, Schneider Electric, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live. To keep up with all that's going on in the Cleaning Up universe, make sure you subscribe to our newsletter. Written and edited by my longtime New Energy Finance and BloombergNEF colleague, Angus McCrone, it comes out every second Monday. Angus provides the latest on the episodes we're recording, the events we're hosting, stories we're watching and what Bryony Worthington and I are up to. To sign up for the Cleaning Up newsletter, visit cleaningup.live.
SU
There's a lot of conversation right now about, how can Indonesia capture more of the downstream value, right? To move away from these extractive resources, but into more of the downstream, higher value goods and services. And so, of course, recently the government's introduced a lot of export controls and component products, so I'm just curious, does this help or does this hinder private investment? How does this sit within the context of this new kind of green economy and the push here?
SU
I got a lot of benefit spending 10 years with Pak Prabowo early in his presidential bid, I was his spokesperson in 2014, I was his running mate in 2019. And whatever he was thinking and deep diving along that 10 to 15 years process is already written in the book he published, and the book's title is Paradoks Indonesia. So you mentioned export control, he actually articulated Article 33 of our constitutions, whereby all the resources of this country should be for the benefit of the greater good of Indonesians. So the narrative is export control, but actually what he's trying to achieve is that all this illegal mining, illegal logging, illegal plantations that actually generate close to half of the state losses is something that he's trying to streamline.
And now, thanks to technology, you don't really have to, and countries are working together to sort of like make sure that numbers, because at one particular point in time, we probably had an experience of, hey, Indonesia export X millions of coal, but how come the revenues is only 20 or 30% less? And there's some country that actually becoming a transshipment and value is being captured tax-free and not bringing in a lot of revenues that would be needed for Indonesia to build our economies. So this is where Pak Prabowo came in and said that we need to make sure that the government is present with an entity that is now controlled by the government, it's a government entity.
SU
Danantara, the sovereign wealth fund.
SU
Yeah, the sovereign wealth fund would sort of like integrate, synchronise, coordinate all these activities from, I would say, public-private partnership to ensure that every single exports that come from these partnership between public and private in accordance to Article 33 would be in accordance to the law and bring in the benefits for greater goods of Indonesians. So that is actually the misconception, and it is because that during the 2024 elections, I have already warned some of my business partners, some of my business people, friends from the associations, because I was stepping out of the government, I told them that because they thought it's a continuity government.
Pak Prabowo will take over and continue much of Pak Jokowi and Pak SBY's policies. I said, no, this is going to be different because he won't be happy with just 5%, he wants to create a 6%, 7%, 8% growth. He wants the government to take a more prominent role in business. He wants the sovereign wealth fund to actually be the engine of growth, he wants us to in the private sectors, to look for investments outside Indonesia too and make our economy be at par with some of the big giants economies in the G20. And as we need to move from now probably number 15, number 16 in the G20, ranking of the size of the economy into the top 5 within the 20 to 25 years where we have the demographic dividend. So that is precisely, I think from the policy point of view, people should look at it. And the jury is out whether his policy could deliver the 5%, 6%, 7%, or 8% as he was campaigning and would bring better prosperity. And the best is the 2029 elections, whereby people would think that his direction is clearly the better direction the country should take.
SU
That's a really actually interesting perspective and not something, for example, even in Southeast Asia that we get to hear a lot about. And of course, as a Singaporean, 7%, 8% growth in Indonesia would be fantastic for the region, right?
SU
For everybody.
SU
We're all rooting for it, right?
SU
Should be. And you mentioned about the carbon, we just recently fixed the regulations so that the sector is now open up again.
SU
So maybe just for the listeners who may not know, Indonesia used to be one of the largest exporters of carbon credits. And in 2022, I believe there was a moratorium, the Indonesian government stopped…
SU
Big debate in the cabinet meetings, I have to tell you now that I can be open about it, but some ministers felt we are benefiting the foreign parties by participating in their carbon credits. Some, including me, thought, no, we're actually opening up more jobs for Indonesians and we're getting revenues for Indonesians. So there was a big debate and I think the president at that time decided, okay, let Pak Prabowo decide where to move and Pak Prabowo correctly decide that let's pause, let's lift the moratorium and let's do a sandbox and see whether this in accordance to Article 33 of our constitution would deliver the benefits to Indonesians.
SU
Yeah, so I mean, I think it's really interesting. So, you know, the stat that I have is that Indonesia has the potential for over 13 billion tons of carbon dioxide equivalent in carbon credits, right? I mean, your peat lands, your forest, your mangroves, 100 billion tons of CO2 sequestered for sure, right? So it's a huge, huge opportunity. And the carbon market could be worth, you know, over $650 billion for Indonesians. And so I think looking at that from an outsider perspective, actually I understood because for a long time there's a perception that the extraction of Indonesia's natural capital didn't benefit enough of Indonesians. So looking at carbon credits and Indonesia's importance in the carbon markets as a natural resource that should also go back to benefit Indonesians, I think is actually a very interesting and understood policy. So in 2025 it's lifted now, I think the first batch of carbon credit, forest carbon credits was reissued earlier this year in July, I believe. And so I think this is a good time to talk about MUTU. So you bought a 13% stake in Mutuagung Lestari or MUTU, you became a chairman as well, so why take this bet now?
SU
MUTU is a word in Indonesia that means quality. So Mutuagung Lestari Tbk, which I think the brand name is MUTU International, should not only translate to quality, but also to sustainability. So I saw an opportunity, work with current management and the major shareholders, whereby they are opening up collaborations into the next, because the company has been around for 30 years, they want to open up for the next 30 years and they need partners. So I put up a consortium that takes the first phase of a strategic stake, but have a roadmap and a path for control in the future, which will bring opportunities to acquire more assets into Mutuagung Lestari. They have an existing business that provides testing, inspecting, and certifying in particular green products and verifying and also monitoring some of the green economic activities.
That will continue because that's a large part of the DNA of the company, but we are bringing in more pillars of economic opportunities for the company, because we see carbon for instance, we need to make sure that we put in more capital into, now that the players are getting more and more into this space. And I think as natural in other progressions of industries, there will be consolidations. So I think MUTU will take a strategic role to start putting capital into these carbon development projects and consolidate some of the early stage ventures into accelerating into a medium and growing into large opportunities that would be available to be invested by the public. So the public, as you mentioned that Indonesians should take benefit for this carbon development projects should also be available through a publicly listed company. And this is where MUTU will play a role. This pillar on the carbon side will be the next important pillars of Mutuagung Lestari expansion.
The third one, the third pillar that we're thinking is also in the space of the intersections between the digital economy and the green economy, which is in relation to physical AI. And physical AI would need energy and energy that comes from green, new and renewable resources, as well as on waste management. So these areas we believe would need the capital and the governance that we could bring in and experience that some of the earlier ventures that I took from just the first hundred million dollars worth of value into the billion dollars of opportunities for the market to see the upscaling of the businesses, so I'm very excited. This is my first role post-government being chairman back in the corporate sectors, I think the teams are excited. I'm also bringing in more young generations because this is something that Gen Z relates to and it's relevant to them. They like investing in equities and stock markets, but they also want to invest in something that is close to their passions, which is…
SU
Sustainability, the environment, Indonesia is very beautiful.
SU
And now you see all these forest fires that could be prevented if we have better management of our forests, of our resources. And from some of the investments that we made in the carbon development projects, these are some of the areas that actually did better in managing and preventing forest fires compared to, we know that there's El Nino, but if you have a guardian in terms of corporate and public sectors, involvement into managing these great resources, you could prevent something like this. My heart goes to people all over Indonesia and in Singapore and Kuala Lumpur and even up to other parts of Southeast Asia that has to deal with this haze in particular. And I think this is the time for us to put together our efforts and really put in the smart capital into the sectors to prevent something like this repeating itself every three or four years as the climate change continues to affect our lives for the years to come.
SU
Yeah, indeed. And I mean, I think in a very short span of time, you know, this 30 years that we're talking about, we've seen Indonesia become leaders in natural capital industries, right? We talked about coal, of course, palm oil is another example of this. But I think there's another opportunity now to become a leader in preservation of very important natural ecosystems, like for example your peatlands, which are huge carbon sinks that actually could really make Indonesia a very, very key player in the fight against climate change.
SU
Yeah, nature-based solutions, peat soil, for instance, mangrove, when I was in the Ministry of Tourism, a lot of value could be created because mangrove actually did six times better job into reducing carbon footprint.
SU
Yes, yeah.
SU
And we have the largest ecosystem of mangrove that not only does its job for reducing carbon, but also is preserving marine life. And then you have the coral that is actually part of the blue economy. That actually would really be needed for people to start looking at it as an entire opportunity for the Coral Triangle of the world.
SU
I was also surprised to learn a few years ago that Indonesia is the second largest producer of seaweed globally.
SU
Yes.
SU
So a huge industry where, again, there is a structural advantage and the products from seaweed, everything from biostimulants to bioplastics is in huge demand.
SU
Right.
SU
So I think there's lots of opportunities for Indonesia to take advantage of it.
SU
We are only seeing the tip of the iceberg, there's a lot of opportunity. I think the transformations is, they're just pretty much like AI. People are seeing AI is just at the beginning of a very major super cycle, the green economy is experiencing the same, although we are not getting the same type of valuations like the NVIDIA.
SU
Not yet, not yet.
SU
But we believe the next NVIDIA of the world will be produced by companies that focus on green economies and I hope Indonesia will play a major role.
SU
Pak Sandi, thank you so much for sharing so much of your perspectives during this conversation, and thank you for allowing me to challenge you a little bit. My closing question is, you started Saratoga in the depths of the financial crisis where you were looking for these undervalued assets, where the fundamentals were still strong and still there. So if you were to apply the same instincts that led you to start Saratoga, but to climate instead, where do you think the undervalued climate assets are today, and why?
SU
That's like a billion dollar question.
SU
Could help us out too with our strategy!
SU
First, I don't think, and I would not be popular with other investors, in particular fund investors, is I don't think this asset class would be, I don't think that it would fit into the standard 5-7 years investing, 3 years harvesting.
SU
Interesting, so it's a longer hold.
SU
It's a longer hold. That's why we are using our investments in a public vehicle. So it's a little bit like a private investment in public equities, which allow investors to come in and to exit at the appropriate time that they would like. Because the opportunities here, and in particular Indonesia with the regulations, probably would slightly either be longer and deeper. And once it is already in full steam, it could be much shorter and much wider. So first of all, I think the structure has to be changed. Should not be the normal 2% fees, 20% carry or 10 year fund life, but it should be longer. And I think it should be unfortunately smaller management fees, but probably bigger carry for managers, that's the structure.
In terms of the sectors, I would say the first one that is very much yielding is the services business. And that's why MUTU would be benefiting because a lot of these ventures would need testing, would need inspecting, would need certifying, verifying. So the service-based consultants, advisories, these are already getting jobs up to here, up to their ears. So I heard they're really hiring a lot of people, which is good, I think that creates a good quality of green jobs. And I think companies that are very niche playing into a very, very, very thin vertical would benefit because they would be able to convert whatever they do right to cash. Because now cash is king. People say, okay, green economy, but we want to see the cash.
SU
So focus on unit economics.
SU
Unit economics, bringing it price low, managing the revenues, and that's where the early winners would come. The second phase would be the medium to longer term. So these carbon development projects, the peat soil, the mangrove would fall into that criteria. And I think these are the big, big guys, these are the next billion dollar, two, three billion dollars opportunity, these are the unicorns.
SU
But they are longer holds, right?
SU
They're longer holds. Much longer than the previous cycle of extractive economy. So these are more, I would say it would take a longer time to do. And then the final would be the really longer term that would require a lot of government support. Waste to energy, for instance. That's why government comes in, because that's another 7 to 10 years progressions, and that's government needs to provide incentives. So anything that relates to the behavior of the people, regulations of the government would fall into this. Like the management of our landfill, this is like a time bomb. If we don't do something, and it has to be government with regulations and private sectors, and the community with their behavioral changes in how they consume, how they manage their waste, I would say, fall into that third criteria. And also the new and renewable energies would fall into the space.
SU
Interesting, so the more infrastructure, more systemic type of change.
SU
The third horizon would pretty much carry all the mistakes that you make in the first and second phase. If I look back into my previous life, Saratoga made probably 40, 50 big investments, the one that really carried heavy lifting, probably now in 6 to 8 companies. So pretty much the same with the green economy. And you have to be very patient, and you deal with the right investable companies. Not just the sectors, but look at beyond the sectors, beyond the numbers, are the people. So Indonesia, Southeast Asia, we are very people-first society. So invest with the right people, create trust with management, value integrity, build your reputations, and you will succeed.
SU
Oh, fantastic. Thank you very much, Pak Sandi, thank you for joining us on Cleaning Up. And I guess personally, it's good to think that you are now a member of the investors in the green economy so it gives us, I think, a lot of confidence when people like you kind of join the fight for the green transition in the region. So thank you very much for joining us today.
SU
Thank you so much.
SU
That was Sandiaga Uno, co-founder of Saratoga and former Indonesian Minister for Tourism and the Creative Economy. Thank you to Pak Sandi for joining us on Cleaning Up. As always, we'll put the links in the show notes to the resources that Pak Sandi and I mentioned during our conversation. I'd like to thank Oscar Boyd, our producer, Jamie Oliver, our video editor, Kendall Smith, our head of operations, and the team behind the scenes at Cleaning Up, our Leadership Circle, without whom none of this would be possible, and you, the audience, for joining us today. Please join us at the same time next week for another episode of Cleaning Up.
ML
Cleaning Up is proud to be supported by its Leadership Circle. The members are Actis, Alcazar Energy, Arup, Climate Imperative Foundation, Copenhagen Infrastructure Partners, Cygnum Capital, Davidson Kempner, EcoPragma Capital, EDP, Eurelectric, KKR, Mitsubishi Heavy Industries, National Grid, Octopus Energy, Quadrature Climate Foundation, Schneider Electric, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live. If you're enjoying this episode, please hit like, leave a comment, and also recommend it to friends, family, colleagues, and absolutely everyone. To browse our archive of around 250 past episodes and to subscribe to our free newsletter, visit cleaningup.live.