The title of our May 2022 report is ‘Indonesia’s Age-Old Energy Subsidy Addiction’ as the first article discusses the Indonesian government’s decision to add around USD $20 billion to its public energy spending budget for 2022 (in the form of electricity, LPG and fuel subsides as well as compensation payments to state-owned companies Pertamina and Perusahaan Listrik Negara, PLN).
However, the government also plans to add more funds to its 2023 public energy spending budget. And considering 2024 is a ‘political year’ with the presidential and elections being held, we might see the continuation of generous spending to keep specific energy prices low as the Indonesian government typically more generous ahead of elections. So, will we see a rising energy budget in the 2022-2024 period?
Another article zooms in on nickel, an ingredient in a wide array of products. Being the world’s largest nickel producer and enjoying the world’s largest nickel reserves, Indonesia is a key player in the global nickel industry. However, the country struggles to optimally tap this potential because for decades it has merely been exporting cheap nickel ores instead of processed goods that have added value (thereby essentially encourages industrialization at the export destinations).
With the rise of the electric vehicle around the globe, nickel becomes even more important as it is a crucial element in the electric vehicle battery. In 2020 the Indonesian government banned exports of nickel ore, forcing industry players to establish onshore smelting facilities and process the ores before exporting becomes an option. In this article we discuss the effect and consequences of this ban. For example, did it indeed lead to the establishment of more smelters? And to what extent do rapidly changing regulations and policies disturb Indonesia’s investment environment?
Other topics discussed in this May 2022 report include Indonesia’s Q1-2022 gross domestic product (GDP) growth, and Bank Indonesia’s monetary policy (which left the benchmark interest rate unchanged at 3.50 percent in May 2022 despite various other central banks around the world raising their key rates). For a full overview of the content, please click on the link below.
Take a glance inside the report here!
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