Indonesia Energy Policy – As an entrepreneur or an executive that is looking for opportunities, especially in the realm of energy and resources, you must have been meticulously understand the political economy of your market country.
The political economy perspective, however biased, complicated or dramatic is crucial catalyst for success or bust. This is because the politics around the business activities might let loose or limit our movements. The strength and jurisdiction of the country thrives on the form of the law.
This is why it is important for us to understand Indonesia Energy Policy. This article will be much informed by the partners and the associates from Proconsultofficial.com – the best and trusted partners who would provide business intelligence, updates, and consultation for you.
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Understanding Indonesia’s Past Energy Policy
The Indonesian government in the past has yet to make a wide array on regional construction. From the 1990s, the development of infrastructure hasn’t been equal across the archipelago. This Java first policy, would later determine the rest of our history until today.
Based on some data on Indonesia Energy Policy by Proconsultofficial.com, the lack of development outside Java makes the exploration budget for investors, a giant burden. This is because the lack of accessibility makes them hard to find the source of energy.
What we meant by accessibility is the roads, bridges and other things to connect us from point a to point b. the transportation modes were also conventionally unequal and slow. Sometimes, the government showers a certain region with money, and others null.
Indonesia Energy Policy were mostly tied into the interests of three major ministries: forestry, energy and mining, and maritime and investment coordination. This is because, the activity of mining would coincide with the agendas of those department.
The ministry of forestry often be the one who set the limitations or the progression of the discovery and exploration process. From time to time, this ministry was often be the one who outright ban or crucially limit the permission for the individual investor or government enterprise mining.
Within the ministry of forestry, Indonesia Energy Policy were mostly taking a stance towards protecting the natural surroundings and making sure that the activity won’t do any harm. Nobody wants another Deepwater Horizon incident right?
And of course – the main goal of the ministry of forestry is protecting the forests and the trees with the added caveat to also preventing or minimize the risk of climate change and disasters due to human activity. This is why they are the gatekeeper of the energy business.
The other, more clearly influenced the state of energy in Indonesia Energy Policy is the ministry of energy. Ministers of Energy have clear and direct power to distribute various points in Indonesian needs for electricity, fuel, and other energy.
They were also collaborating with the ministry of finance to ensure that the gas, solar and other fuel prices won’t be skyrocketing wildly. This is why you often see the minister of energy and the finance minister make joint statements or working on certain policies and bills.
Also Read: Indonesia Energy Resources for Investment and Business
Current Developments
That’s the foundational knowledge about Indonesia Energy Policy, but now we’re going to update you with some trends and information in regards to the energy business in Indonesia. Some are better than other, but local partners might know how to maneuver through them.
The ministry of forestry, once an immovable bastion of forests, has tried time and again to shift from outward rejection to limitation for accesses that were granted, and finally – supervision. What do we mean by that sentence?
The truth is that, as the current Indonesia Energy Policy is favoring business-friendly policies to drum up investment, both foreign and domestic – coupled with the strong willingness and the main goal of bringing the economy back to its feet – the ministry of forestry yielded more permissions.
On the other side the ministry of energy and ministry of finance has enacted some laws and mandates to make sure that the energy is served, while also making a chance for certain renewables to be able to have a strong foothold before we transition our resources there.
An example of such Indonesia Energy Policy, since 2012 and again in 2014 – the ministry of energy and ministry of finance has agreed that the State Electricity Enterprise (PLN) would be mandated to purchase 40% of its resource from geothermal companies in order to give geothermal a market.
Then, there is a cap on the maximum amount that PLN could charge to people. There are discounts, increases, or decreases that would make the policies, but so far – all were done in order to control the fluctuation of energy price that direct customers/constituents were paying.
The shift from fossil fuels to renewables was also a brand new shift that marks the current trend for the Indonesia Energy Policy. This is due to the lack of new oil exploration, and the shift from mining coals and oils to using the existing sunny climate and tremendous geothermal reserve.
The government also plays a significant role in the marketing and pricing of B2B and even direct-to-consumer activities. The subsidies are mainly the primary tool that the government tries to use in it’s many attempts to make better and more accessible energy for the people.
The current trend of the government itself was mostly pro-business. Even though there are many talks about Indonesia Energy Policy being more and more protective and conservative – but there is a lot of proof that in the end of the day, the administration is pro-business.
This is evident in the ratification of the omnibus law, which tries to make sure that the businesses could operate optimally. Other laws that were enacted in order to strengthen the ease of doing business in Indonesia is mainly agricultural law to prevent the legal fighting for land ownership.
The Good Place (For Business)
Indonesia’s Energy Policy is often and currently on the trend for a pro-business stance. This is because the consumption of electricity and solar is constantly increasing and always on the upward trend.
As such, you should not worry much about Indonesia Energy Policy being less than aiming for increasing the ease of doing business. Based on many things that we’ve examined in this article, Indonesia is still a good place for business in the energy sector.
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