Foreign companies seeking to establish a non-oil and gas mining operation in Indonesia are required to obtain a mining license. This section briefly explains what is needed in applying for one.
After being highly sought-after and becoming a leading foreign exchange earner through the early 2000s, Indonesia's coal sector has been hit hard in recent years following the fall in commodity prices.
The economic slowdown and uncertain global environment have obstructed Indonesia's policy to push the country's mining sector to invest in metal smelters and downstream industries. Falling exports and the depreciation of the rupiah raise questions over the timing of the government's move to ban shipments of unprocessed metal minerals.
Building Indonesia's metal industries requires immense capital, much of which will come from abroad. The ore export ban, therefore, should be seen by foreign investors as an opportunity rather than a threat. For mining companies willing to play by the new rules, it's far from game over.
Faced with a swelling current account deficit, the Indonesian government is in the process of revising its stance on existing and impending regulations that would see a ban on the export of unprocessed mining products by 2014.
Foreign investors seeking to operate in Indonesia’s oil and gas sector are exposed to certain conditions and requirements. This section provides a brief explanation of the permits, joint cooperation contracts and the tendering process involved.
As it seeks to reduce Indonesia’s dependence on fossil fuel imports, the government has little choice but to rewrite some of its rules in the oil and gas sector. Companies offering equipment and services are set to be among the main beneficiaries.
Growing energy demand and manufacturing activities are creating investment opportunities in Indonesia’s downstream oil and gas sector. This section looks at the latest development within the downstream sector of the industry.
President Joko Widodo on 17th November 2014 formally implemented his government’s much-anticipated plan to raise the price of subsidized fuel by 2,000 IDR per litre. Attention is now rightly being paid to industries most affected by this reform and its impact on the business landscape.
Underinvestment has hampered progress in Indonesia’s oil and gas industries since the Asian financial crisis in 1998. This section looks at the ongoing challenges as well as opportunities being faced in the upstream sector.
The notion that Indonesia could become a net importer of natural gas by 2020 may seem absurd because it has the eighth largest proven gas reserves in the world. Despite this rich endowment, Indonesia could yet be facing net gas shortages by the end of the decade.
Indonesia since 2009 has required contractors of energy service projects to source a proportion of its components from local manufacturers. This policy has over the years been subject to revision and supplementary regulations that now place an even greater onus on companies to work with domestic providers of engineering services
With about 40% of the world’s geothermal reserves being located below the surface of Indonesia, the country is estimated to contain the world's largest geothermal energy reserves and therefore contains huge potential for this renewable energy source. However, this potential remains largely untapped.
Indonesia has been slow out of the blocks in developing renewable sources of energy, but the country’s natural potential is enormous. In an effort to reduce costly oil imports, the government has begun to raise fuel and power prices to promote the development of alternative sources of energy.
An advantageous geographic position on the equator has long afforded Indonesia with immense potential for solar energy. With the country’s solar energy industry ready to begin a concerted expansion effort led by the government and state owned enterprises, demand for locally manufactured components such as solar panels is set to boom.
Despite a doubling of its total electricity generating capacity in the past decade, Indonesia still has a low electrification rate compared to countries with similar income levels and aims to achieve nearly complete electrification by 2020.
Indonesia on 1st May 2014 kicked off its most recent round of electricity tariff hikes carried out to curb the nation’s soaring energy and power subsidies. Imposed on industrial consumers, this price increase has local businesses concerned for their competitiveness as well as re-evaluating their outlook for the immediate future.
Contribution to GDP: 11% (Q3 2015)
Oil & Gas Imports: $22.8 billion USD (Jan-Nov 2015)
Proven Oil Reserves: 3.7 billion barrels (2015)
Proven Gas Reserves: 101 trillion cubic feet (2015)
Proven Coal Reserves: 28 billion tonnes total reserves (2015)
Proven Potential in Geothermal Energy: 29 GW
Proven Potential in Hydropower: 75 GW
Other Energy Sources: Coal Bed Methane, Biomass, Waste, Ocean Current, Solar, Wind.
Current Energy Mix: Petroleum 41%, Coal 30%, Natural Gas 23%, Renewables 6% (2014).
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Bahana Securities Analysis: Indonesia Coal Update