JAKARTA - FRANCE is set to hand Indonesia US$200 million (S$303 million) in aid to fight climate change in the South-east Asian archipelago nation, the French Development Agency said on Tuesday.

The money will fund a three-year Indonesian government plan to reduce emissions from Indonesia's forestry, industrial and energy sectors, a statement from the agency said.

'Indonesia has designed an ambitious and also comprehensive climate change policy and we are providing support through this contribution,' agency chief Jean-Michel Severino told AFP after signing the aid agreement with Indonesia's finance ministry.

He said the agency will also provide technical assistance to improve the energy efficiency of Indonesia's cement and steel industries and help set up a scheme to allow smallholders to trade carbon credits.

Indonesia is the world's third-highest emitter of greenhouse gases, largely due to rampant deforestation on Sumatra and Borneo islands. -- AFP