Credit rating agency Standards & Poor's (S&P) says Indonesia (and Malaysia) need to increase efforts to build a good track record of timely and reasonable power tariffs adjustments in order to ensure decent returns for investors and recover their costs. Delays in energy price revisions, which are sometimes the result of political strategy, are the key risk that jeopardize the financial stability (and credit profile) of state-owned utility company Perusahaan Listrik Negara (PLN). S&P therefore advises the Indonesian government to enhance efforts to ensure a sound regulatory framework (i.e. a transparent tariff rate-setting mechanism).

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On Monday (03/11), several important macroeconomic data were released by statistics Indonesia. Firstly, inflation was relatively high in October at 0.47 percent month-on-month (m/m). Secondly, Indonesia posted another trade deficit in September (USD $270 million). Thirdly, Indonesia's October manufacturing activity showed a contraction (the country’s manufacturing Purchasing Manages' Index fell to a 14-month low of 49.2 in October). Lastly, a total of 791,300 foreign tourists visited Indonesia in September.

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Statistics Indonesia (BPS) released various economic data today (01/10) - including inflation, the trade balance and manufacturing activity - that give a good indication about the state of the Indonesian economy. Although not all data was positive, market participants were content, evidenced by an appreciating rupiah exchange rate and rising Indonesian stocks. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.43 percent to IDR 12,135 per US dollar, while the Jakarta Composite Index climbed 0.06 percent on Tuesday (01/10).

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Indonesia’s House of Representatives (DPR) passed an important geothermal bill in a plenary session on Tuesday (26/08). This new bill is expected to be a great leap in the development of geothermal power in Southeast Asia’s largest economy. Indonesia contains the world's largest geothermal energy reserves. However the country only uses a small fraction of this geothermal potential. Meanwhile, amid robust economic growth, the country is in serious need to provide more electricity and power to its people and businesses.

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Indonesian President Susilo Bambang Yudhoyono will be present at the official launch of four geothermal power plants (the Ulumbu, Ropa, Ndunga and Mataloko plants) on 11 September 2014 on Flores (East Nusa Tenggara). These plants will supply 20 megawatts of electricity to eight regencies on the island (West Manggarai, Manggarai, East Manggarai, Ngada, Nagekeo, Ende, Sikka and East Flores). Indonesia is estimated to have the world's largest geothermal energy reserves. However, the country only uses a fraction of its geothermal potential.

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Soon-to-be president of Indonesia Joko Widodo (popularly known as Jokowi) stated that he intends to cut the large fuel and electricity subsidies once in office. Indonesia’s Revised State Budget of 2015 (RAPBN 2015) allocates IDR 363.5 trillion (about USD $31.2 billion) to energy subsidies. This figure accounts for about 18 percent of total government spending (IDR 2,019.9 trillion) set for 2015. Although the energy subsidies aim to support the poorer segments of Indonesian society, they cause complex problems in Southeast Asia’s largest economy.  

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On 17 August 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such as the performance of the rupiah exchange rate, plantations, Freeport Indonesia, economic growth, electricity, property, guidelines for the construction of a PT PMA, and more.

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Despite having abundant natural resources at its disposal (including coal and gas), Indonesia has difficulty to supply enough electricity to its people and businesses. Robust economic growth over the past decade has given rise to increased domestic demand for electricity but the country has not been able to adequately meet demand resulting in frequent blackouts and in one of the lowest electrification rates (the percentage of Indonesian households connected to the nation's electricity grid) in the region (about 80.4 percent at end-2013).

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Perusahaan Listrik Negara (PLN), the state-owned utility company that has a monopoly on the distribution of electricity in Indonesia, recorded a 158 percent growth (year-on-year) in net profit to IDR 12.3 trillion (USD $1.1 billion) in the first half of 2014 due to improved operational efficiency and a foreign-exchange gain of IDR 4.4 trillion (USD $376 million). Meanwhile, the company's revenue increased 24 percent to IDR 145.1 trillion (USD $12.4 billion) as electricity sales increased and PLN received more subsidies from the Indonesian government.

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Indonesian state-owned electricity firm Perusahaan Listrik Negara (PLN) said that Indonesia - Southeast Asia's largest economy - is expected to nearly double domestic consumption of thermal coal over the next eight years in an attempt to meet the nation's growing electricity demand. Moreover, coal, of which the country has huge reserves at its disposal, is regarded a better fuel source in electricity generation compared to expensive diesel. At present, many power stations in Indonesia are still diesel-powered.

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Subscribers may have noticed that over the past couple of months, perhaps even the past half year, we devoted one article per month to the topic of renewable energy. And, it is a combination of factors that motivates this decision.

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The novel coronavirus (COVID-19) crisis has a wide range of economic and social consequences. For example, the Indonesian economy is likely to contract this year (for the first time since 1998), while millions of Indonesians have lost their jobs over the past three months, and the majority of the country’s enterprises have seen their sales plunge.

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On Sunday 4 August 2019 and Monday 5 August 2019 the capital city of Jakarta, a large part of West Java, and parts of Central Java were without electricity. On Sunday the power outage lasted from around noon to 21:00 pm, an unusually long period, while the following day the outage lasted for approximately six hours (depending on the exact location); also an unusually long period albeit not as long as on the preceding day.

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Based on the latest reports - and contrary to earlier plans - the Indonesian government will not postpone the development of 15,200 MW of power projects. Earlier the government said it wanted to delay various power projects in an effort to curtail imports, thus improve the country's current account balance and ease heavy pressures on the rupiah exchange rate.

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As Indonesia is increasingly focusing on renewable energy sources, the potential of geothermal power in Indonesia is usually in the spotlight. However, the potential of ocean thermal energy conversion (OTEC) is seldom mentioned, while it is estimated that Indonesia's OTEC potential is around 41,000 megawatt (MW), among the biggest worldwide.

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The central bank of Indonesia (Bank Indonesia) said it carefully monitors the impact of higher electricity tariffs on the nation's inflation pace in March 2017. This month the government implemented the second phase of its gradual electricity tariff increase program for 900-VA household customers. Indonesia's state-owned electricity company Perusahaan Listrik Negara (PLN) decided to raise the electricity price for 900-VA households three times this year in order to cut energy subsidies and ensure that these subsidies are indeed channeled to the right people.

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Indonesian Vice President Jusuf Kalla has high hopes for the development of renewable energy, such as geothermal energy, in Indonesia. Given that fossil fuels are exhaustive and dirty, clean and renewable energy sources are the future. Therefore, Indonesia should make more use of its huge geothermal energy potential. Southeast Asia's largest economy is estimated to contain 40 percent of the world's total geothermal reserves. However, it only utilizes 5 percent of its geothermal energy capacity.

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The central bank of Indonesia (Bank Indonesia) expects to see deflation in April 2016 on the back of controlled food prices as the harvest season has arrived. Bank Indonesia Governor Agus Martowardojo said a central bank survey shows deflation of 0.33 percent month-to-month (m/m) during the first three weeks of April. Besides lower food prices, Martowardojo also attributes April deflation to the government's decision to cut fuel prices (premium gasoline and diesel) by IDR 500 (approx. USD $0.04) per liter per 1 April. This move led to a 4 percent drop in public transportation tariffs.

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Elnusa is an Indonesian company that provides services in the upstream oil & gas sector. Although the oil & gas sector has been plagued by low prices, thus curtailing corporate earnings, there is something that makes Elnusa's position strong. Recently, Elnusa purchased a seismic vessel that can be used for marine seismic surveys for oil & gas exploration. In Indonesia only a few companies have the skills and equipment for marine seismic activities (and only a few companies have a seismic vessel). Moreover, Elnusa's new vessel is a modern one that is equipped to conduct high quality surveys in deep sea.

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According to the Association of Indonesian Processing and Refining Companies (AP3I), consumption of mineral ores in Indonesia will be solid starting from 2017 due to the start of operations of new smelters. Jonathan Handojo, Vice Chairman of the AP3I, says domestic consumption of nickel ore will reach 7 million tons in 2017, roughly the same amount of nickel ore that was exported in 2009 before the New Mining Law - which stipulates a ban on exports of mineral ore from Indonesia (per January 2014) - was revealed.

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