Indonesia’s women entrepreneurs have been the backbone of the country’s economy, driving more than 60 per cent of its national gross domestic product as they operate millions of micro, small and medium enterprises (MSMEs).
Yet, despite their outsized contribution and proven track record in maintaining profitable businesses, many continue to face systemic barriers that limit their access to capital, markets and decision-making power.
Many of the country’s 57 million MSMEs that are women-led have strong representation in sectors like food and beverage, textiles and traditional crafts. But their access to collateral remains constrained – only 19 per cent have received approved bank loans, for example. Studies have also found that gender biases act as a barrier for women entrepreneurs to scale their businesses and many lack adequate support networks.
In recent years, the government has taken steps to improve access to finance for women, including through gender-focused lending programmes and the issuance of “orange bonds” – an emerging debt asset class for investing with a gender lens – in partnership with state-owned institutions like PT Permodalan Nasional Madani (PNM).
A key partner the government and PNM are working with is Impact Investment Exchange (IIX). The Singapore-based multinational organisation is seeking to reshape the financial landscape for sustainable development and to uplift women’s voices in markets that have underrepresented them.
It increasingly sees Indonesia – among other Asian emerging markets such as Sri Lanka and Vietnam – as a strong platform for structuring and introducing its “orange bond” frameworks, named from the colour assigned to the United Nations’ Sustainable Development Goal (SDG) 5 for gender equality. This is despite signs of a global retreat from gender-inclusive commitments. .
As protests erupt across Indonesia driven by concerns with rising inequality, women have also been among those who are vocal in demanding meaningful reforms. Their presence on the frontlines underscores a deeper urgency to address the gap between headline economic progress across the archipelagic nation and the lived realities of communities who continue to be left behind.
In its observation, IIX, which is behind the issuance of the world’s first sustainable debt instrument under the Orange Bond Principles, said that identifying the right women-led enterprises to receive intended funds, while ensuring that women who receive financing from orange bonds have the capacity to absorb the funds and grow their businesses, will be critical.
A study that it conducted found that with capacity building efforts, an additional 20 per cent of these MSMEs can reach “investment readiness”. These could tackle issues such as poverty alleviation and drive innovation and social development.
Investing in ‘orange’ amid global headwinds
Supported by IIX, in July this year, PNM became the first financial institution in Indonesia to issue orange bonds. They comprise a IDR 1 trillion (US$615 million) bond issuance in the first phase of a programme worth IDR 6 trillion (US$3.7 billion) in value, aligned with the Orange Bond Principles.
The proceeds will be channeled as working capital to over 250,000 women entrepreneurs and MSMEs through an initiative known as the PNM Program to Foster the Prosperous Family Economy (PNM Mekaar).
Prof. Durreen Shahnaz, IIX’s founder and chief executive officer, describes Global South nations, including Indonesia, as key to “shaping the next frontier of sustainable finance”, as they pioneer new and innovative debt instruments to support economic and social needs.
At a time when inclusive economic policies face increasing global pushback, the leadership of Global South nations in championing these efforts have been “more critical than ever”, she added.
A delegation comprising senior representatives from the Ministry of Finance, Infrastructure Development Company Limited (IDCOL) and Bangladesh Securities and Exchange Commission visited Jakarta in February this year, on an official trip supported by IIX, to understand Indonesia’s efforts in sustainable finance and structuring thematic bonds. Image: IIX
Observers say investments in diversity, equity and inclusion (DEI)-related initiatives are under threat, but market confidence could be restored if policy levers are put in place and “carrots” are available to entice investors. Gareth Deiner, a partner at international law firm Clifford Chance, which worked with IIX on its Women’s Livelihood Bond™ (WLB) bond series, said some of the key challenges have to be confronted.
“At the end of the day, the returns for orange or DEI investing have to be attractive. It would be a very small market if we only have do-gooders who are making the investments,” Deiner said.
The Global South markets also present a compelling narrative for investors. Deiner observed that he is already seeing related transactions taking place that could boost gender-responsive investments within emerging economies. “Capacity building will be the next step. We need to help investors understand what it is they are buying when they are buying an orange bond.”
Creating an “orange bond index” could also provide investors with more transparency, suggested Deiner.
The growth in scale and sophistication of the WLB deals that IIX has inked is further evidence that investors want both credible and well-structured financial instruments, Deiner added.
In 2017, IIX launched the WLB, one of the world’s first listed bonds with an impact mandate, but structured through blended finance mechanisms. Accredited and institutional investors purchased the US$8.5 million bond, with the proceeds from the issuance lent to three social enterprises that empower women by improving their access to critical products and services such as banking. The WLB leveraged multiple risk mitigation layers, including early-stage grant funding and a partial guarantee on the underlying loans. IIX also contributed a small first-loss capital tranche.
By 2023, IIX’s sixth bond in the WLB Series expanded to about US$100 million, with the latest WLB7 representing the series’ largest debt issuance. The first tranche closed in July demonstrating continued investing appetite for these systematically underserved markets.
In its Impact Investing Quarterly outlook published for the second quarter of 2025, IIX also said economic and geopolitical headwinds will remain. This is despite the positive momentum in global impact investing, which has been driven by factors such as the heightened urgency on global sustainability agendas and portfolio optimisation by large institutional investors. More capital is also reaching vulnerable regions.
“Global markets have faltered over the recent US tariffs…Other geopolitical uncertainties also present obstacles to investing in the near term,” the report noted, adding that the closure of the US Agency for International Development (USAID) has contributed to a significant funding gap for impact enterprises and organisations supporting underserved communities, and created more cautious impact investor sentiments.
In January, credit rating agency Moody’s outlined its expectations for sustainable finance and forecasted that global sustainable bond issuance will total US$1 trillion in 2025, in line with the year before, but that social bonds will be constrained by a lack of benchmark-sized projects. In an earlier report, the agency had stressed that debt instruments that finance projects to support gender equity will grow in number in the long term.
Impact verification
In December last year, IIX convened over 300 global leaders, changemakers and innovators at its Orange Forum in Singapore, to highlight the city-state’s role as a hub for sustainable finance and innovation. One of the topics the forum discussed was the importance of taking data-driven approaches to unleash the potential of orange bonds and other impact investment mechanisms.
Taimur Baig, managing director and chief economist at DBS Bank, said that it is often easier to make the “macroeconomic case” for gender-focused investments, referring to the enhancement of women’s visibility and participation in the workforce. On the other hand, presenting “micro-evidence” or credible data to support their impact is harder, though this is improving with taxonomy accounting and reporting standards, he added.
Setyo Budiantoro, who works on Indonesia’s SDGs National Secretariat at the Ministry of National Development Planning, agreed that there is a need to close the information and data gap. Proponents of orange bonds also need to “tread carefully” to avoid the same trust gaps in pushing green bonds, he said, adding that jurisdictions in Asia must continue to expand mandatory sustainable reporting and to improve the quality of collected data.
IIX, in a recent survey, found that a top issue that impact investors face is reliable impact measurement and verification. Out of 305 impact investing organisations surveyed last year, a majority cited fragmented frameworks (92 percent), difficulty in comparing impact results (87 percent) and challenges verifying impact data received from investees (84 percent) as the top challenges they face.
Former banker Lutfey Siddiqi (left) speaking at Orange Forum 2024 at a fireside chat with Impact Investment Exchange’s Robert Kraybill. Siddiqi was appointed the chief adviser’s special envoy on international affairs by the Bangladesh interim government in September 2024, a month after a student-led anti-discrimination movement overthrew long-time prime minister Sheikh Hasina. Image: Roy Ng/ Eco-Business
Another issue is the perception that impact-focused investments might lead to lower financial returns compared to traditional investments or carry higher risks due to operating in underserved or emerging markets.
“This is where governments can come in to boost incentives for impact investing or allocate catalytic capital to de-risk projects. Private-sector players, particularly corporations with strong gender equality and environmental, social and governance (ESG) agendas, can also add to the potential resource pool to invest in impact enterprises,” the IIX report noted.
IIX’s founder and CEO Prof Durreen Shahnaz at Orange Forum 2024 in Singapore. Image: Roy Ng / Eco-Business
IIX has seen a series of milestones this year. In May, IIX announced a strategic partnership with AVPN, the largest network of social investors in Asia, to scale its orange movement and accelerate gender-empowered, climate-resilient finance across the Global South. In Indonesia, together with UNDP and local partners, IIX has established new programmes supporting Indonesian impact enterprises.
The Indonesian government’s commitment to the Orange Movement includes supporting the global mission to mobilise US$10 billion worth of orange capital by 2030.
IIX has closed the first tranche of its women-focused bond this year, the Women’s Livelihood Bond™ 7 (WLB7) at US$52.8 million, and is working to raise the second tranche. The bond will comprise a portfolio of high-impact women-led enterprises in India, Indonesia, Philippines, and Sri Lanka. Once completed, this will mark IIX’s largest bond issuance to date and could potentially empower 773,000 women and girls across South and Southeast Asia.
IIX’s work spans over 60 countries globally, where it has mobilised US$500 million of private-sector capital as of 2025. Its mission is to mobilise a total of US$10 billion by 2030 under its Orange Movement to empower 100 million women, girls and gender minorities.
Shahnaz said the movement aims to reimagine finance as a tool to break the barriers and empower women as strong leaders.
Join IIX at Orange Forum 2025, to be held on November 17-18 in Jakarta, where investors, policymakers, and development leaders can find out how to mobilise and scale orange capital for impact across markets.
