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The Indonesian Government issued four policy packages to push the growth of Indonesia's economy and improve the current account deficit. One of these policies is to increase the use of biodiesel (biofuels) for domestic needs in order to reduce imports of fuel; especially diesel.
KADIN Indonesia welcomed this initiative and hopes the government will implement it promptly. KADIN Indonesia also encourages the government to establish practical measures on the economic policies that have been launched, especially in the field of energy.
KADIN Indonesia also asked the government to prioritise domestic production so that this policy would not only impact the environment but also farmers and activists in renewable energy businesses in Indonesia. The first time the government encouraged the use of biofuels such as bio-diesel, farmers and national companies immediately welcomed the move by opening jatropha plantations and other crops such as cassava and sweet sorghum. However, in the absence of an effective upstream-downstream mechanism (such as support from state energy firm PT Pertamina and state electricity firm PT PLN) the new industry which was driven by farmers and entrepreneurs suffered losses. This would not have taken place if the government had supported the renewable energy crop farmers through subsidies and an incentives policy.
It is important for the government to be able to explain the practical mechanisms involved so the investment made by farmers to meet the biofuel (BBN) demand which will be mixed with fuel oil (BBM) can create positive opportunities for businesses as well as helping to provide energy security.
The Indonesian Government should also cooperate with companies such as Pertamina and PLN to use domestic products. They should also issue policies that prohibit imports of biofuels or fuel additives and support the development of biofuels in Indonesia. For example, Pertamina and its suppliers should be assisted in order to provide a blending facility for mixing biofuel with domestic fuel.
In this context, the government is also expected to be able to push certain national banks and financial institutions to provide working capital for entrepreneurs who are planting biofuel crops such as sweet sorghum, cassava and maize. The government should also evaluate all the upstream-downstream processes, so that they may contribute to the improvement of the economy.
KADIN Indonesia - 2013
Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)
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