Indonesia Plans to Use Sovereign Wealth Fund to Boost Coal Gasification Projects

Indonesia seeks to boost coal gasification projects using funding from its newly launched sovereign wealth fund Danantara Indonesia, the country's energy minister said. 

Indonesia, the world's top thermal coal producer, has been pushing to process low-rank coal to produce dimethyl ether to slash LPG imports, but previous projects have stalled due to foreign investors pulling out. 

"We only need the technology, the capital expenditure will be from the government and local investors," Energy Minister Bahlil said late on Tuesday. "One of whom will be Danantara. 

Bahlil said there were around four coal gasification projects located in South Sumatra and East Kalimantan that will be carried out in parallel. He did not provide details on the project size. 

The coal gasification projects are part of the 21 natural resource processing projects worth USD 40 billion that the government seeks to accelerate. 

Indonesia also plans to increase its fuel storage capacity and build a refinery with capacity of 500,000 barrels per day to ensure energy security, Bahlil said. 

Investment for the new refinery is estimated at USD 12.5 billion, the energy ministry said. 

Danantara, which was launched in February, is slated to eventually manage more than $900 billion worth of assets including government stakes in state firms. 

President Prabowo Subianto has pledged USD 20 billion for Danantara's "first wave of investment" that will target projects in natural resources processing, artificial intelligence development, as well as energy and food security. 

Source: Reuters

Electricity Discounts Cause Indonesia's 0.48% February Deflation

Indonesia posted a 0.48 percent month-to-month deflation in February which the Central Statistics Agency or BPS attributed to the electricity bill discounts. 

The government had halved the electricity bills for households with a power capacity of between 450 and 2,200 volt-amperes. This represents about 97 percent of the customers in Indonesia. The 50-percent discount was one of the economic stimulus packages aimed at offsetting the value-added tax increase. The discounts were available in the first two months of 2025. They also applied for both pre-paid and postpaid electricity bills. Prices are now back to normal. 

"Electricity bills saw a 21.3 percent deflation, and they contributed to 0.67 percent in the [overall] deflation [in February]. This is all because of the 50-percent discounts," BPS' head Amalia Adininggar Widyasanti told a hybrid press briefing on Monday. 

Other factors that contribute to the 0.48 percent deflation include declining prices of food products like broiler chicken meat and eggs, as well as red chili peppers -- all of which had been witnessing soaring prices over the past months. Red chili peppers -- a key ingredient in Indonesian cooking -- logged a whopping 7.31 percent deflation in February. This is much higher compared to boiler chicken meat (3.5 percent) and eggs (1.93 percent), BPS data shows. For context, broilers refer to chickens that are specifically bred for meat production. 

"Shallots and tomatoes have already been facing deflation since January 2025 because supplies have already grown and surpassed that of the previous month," Amalia said. 

The month-to-month deflation for shallots was at the double digits at 10.03 percent, while tomatoes reached 8.56 percent. 

According to BPS, the year-on-year deflation hit 0.09 percent in February. 

Source: Jakarta Globe

Feb Manufacturing PMI of 53.6 Highest in ASEAN: Minister

Industry Minister Agus Gumiwang Kartasasmita said Indonesia's manufacturing Purchasing Manager's Index (PMI) in February 2025, which rose 1.7 points month on month to 53.6, was the highest in the Southeast Asian region. 
 
"Indonesia recorded the highest growth in ASEAN. It even surpassed global manufacturing countries that are currently still experiencing a contraction phase," he informed here on Monday. 
 
Based on data released by S&P Global, Indonesia outperformed ASEAN countries and developed countries, such as the United States (51.6), Taiwan (51.5), the Philippines (51.0), China (50.8), Thailand (50.6), Malaysia (49.7), Vietnam (49.2), Japan (48.9), Myanmar (48.5), Germany (46.1), and the United Kingdom (46.4). 
 
According to Minister Kartasasmita, the increase in the performance of the domestic manufacturing industry was driven by high productivity to meet the needs of the domestic market. 
 
"As the domestic market is still the mainstay, it must be ensured that the onslaught of imports can be eliminated by issuing safeguard policies as well as prohibitions and restrictions to protect the domestic market," he said. 
 
To maintain this performance, the most important effort is the implementation of proper import governance policies to protect the domestic industry, he added. 
 
This can also be seen from the optimism of textile entrepreneurs over the new regulations that have been agreed upon regarding import controls on textiles and textile products. 
 
"This policy will create fair play in the domestic market for imported goods suspected of dumping practices. Of course, this optimism will continue if a similar approach is also applied to other downstream commodities that are directly consumed by the public," Kartasasmita said. 
 
He noted that a number of companies that increased their capacity also increased their workforce during the period. The increase in the number of workers in February was the fastest ever recorded in the survey. 
 
"We are sure that Indonesia's manufacturing PMI can be even higher if supported by strategic policies such as revising the import relaxation policy for seven industrial sub-sectors," he said. 
 
The minister also lauded the sustainability of the Specific Natural Gas Price (HGBT) policy for the industry, which has become the concern of President Prabowo Subianto. 
 
"We thank you, Energy and Mineral Resources Minister Bahlil Lahadalia, for issuing the Decree of the Minister of Energy and Mineral Resources Number 76K/2025 concerning the Extension of HGBT for seven industrial sectors and valid for the next five years," he said. 
 
He added he is confident that Indonesia's manufacturing PMI will remain in an expansion phase in March due to an increase in production and purchasing activity during the holy month of Ramadan. 
 
"Usually, there is a spike in public consumption during the month of Ramadan and Eid, especially in the purchase of food and beverage products, textiles and clothing, and footwear," he said. 
 
To push the growth of the manufacturing industry sector, the Ministry of Industry has also supported the establishment of the Danantara Investment Management Agency, which is expected to spur sustainable strategic projects, including in the development of the manufacturing industry. 
 
"Danantara will have an impact on the progress of the manufacturing industry in Indonesia, with a focus on a number of vital policies, including downstreaming, digital transformation, and green industry," Kartasasmita said. 

Source: Antara News