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Analysis

Infrastructure investment works to keep pace with Indonesia's rapid urbanisation
OBG
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The country’s urban areas have grown rapidly in recent decades, with Jakarta’s population more than doubling since the 1970s, driven by an influx of rural migrants seeking better opportunities. This growth has not been without consequences, as municipal governments struggle to absorb new residents, and infrastructure and employment gaps pose significant challenges to smooth urban growth. This trend…

Analysis

Preparing Indonesia's banking sector for new legislation on foreign ownership
OBG
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For most of its history, the Indonesian banking sector has been highly regulated, with the government often intervening in a heavy-handed manner to achieve policy goals and correct larger economic concerns. The results have been mixed, with the authorities erring at times on the side of too much control and at other times on the side of too much freedom, with some of the reforms of the 1980s and 1990s…

Analysis

Coal-fired plants offer a more affordable power source for Indonesia
OBG
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With the spectre of an electricity shortfall looming larger with each passing year, the Indonesian government is looking to coal-fired thermal power plants to provide a quick and easy solution. Coal has many advantages over other forms of power generation in Indonesia: it is cheaper, more established technologically and abundant. It is also seen as preferable to diverting dwindling supplies of natural…

Analysis

Regulatory changes to speed up geothermal development in Indonesia
OBG
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Already the world’s third-largest geothermal power producer, Indonesia is poised to enter a fresh phase of expanding this resource, with a new law setting the stage for further investment. By smoothing out many regulatory wrinkles for developers, the government hopes to tap the many subterranean thermal hotspots that dot the country as electricity producers scramble to meet growing demand. The same…

Analysis

Indonesia's energy subsidy reforms
OBG
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Long known for maintaining low fuel prices despite its large population, Indonesia has recently begun to take meaningful steps to reform a decades-old policy that has bloated federal budgets and often fallen short of its purported aim of helping the less fortunate. Policymakers in Indonesia, as in many countries around the world, have long seen energy subsidies as a quick and easy way both to appease…

Analysis

Regional plans for transport well under way in Indonesia
OBG
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The year 2015 is a landmark one for South-east Asia, with the much-anticipated arrival of the ASEAN Economic Community (AEC) due by the end of the year. This event will have far-reaching consequences across a whole range of economic, political, social and cultural fields, with the impact on the transport sectors of ASEAN member states also likely to be profound. Given its key strategic location within…

Analysis

Indonesia's equatorial location an asset for solar energy projects
OBG
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Although the focal point of renewable energy development in Indonesia has been geothermal resources, of which the country holds over a third of the global total, in recent years solar power has gained new attention as a viable source. As an equatorial country, Indonesia is well-placed to reap the benefits of new solar options, with off-grid projects offering new ways to connect rural residents. Meanwhile,…

Analysis

More local natural gas needed in Indonesia
OBG
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As Indonesia’s economy keeps chugging along with annual growth rates around 6% in recent years, its appetite for energy continues to expand in parallel. Demand for primary energy hit 130m tonnes of oil equivalent (mtoe) in 2013, and GDP growth of 8% a year through to 2025 forecast by the National Energy Council (NEC) is expected to push growth in energy consumption up to 7.3% a year in 2013-25, under…

Analysis

Scrapping oil subsidies frees up funds to invest in Indonesia's new infrastructure projects
OBG
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One key development in the new wave of Indonesian infrastructure programmes is a major change in the way they will be funded. The government is set to play a much bigger role in financing, directly through increased central and local government budgets, and indirectly through enhanced funding opportunities for state-owned enterprises (SOEs). The private sector stands to benefit from this public sector…

Analysis

Stamping out corruption on the energy sector in Indonesia
OBG
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Throughout the 2014 campaign for the presidency, Joko Widodo, the eventual winner, stressed the need to bring new blood into a system widely perceived as broken and corrupt. With Widodo now in the driver’s seat, the optimism and hope that often follow a change in leadership is coming to a head during his first year of office. The big questions on everyone’s mind are whether the grand promises made…