Focus Group Discussion Manufacturing Sector Review: Alternative Policy Strategy to Ensure Competitive Manufacturing Energy Supply

Figure 1. Mr. Luluk Sumiarso (holding a pointer), as the PYC representative, gave a presentation on energy in manufacturing industry in the FGD held by Bappenas and ERIA

The Ministry of National Development Planning/National Development Planning Agency in cooperation with Economic Research Institute for ASEAN and East Asia (ERIA) held a Focus Group Discussion (FGD) on 28th of September 2018 in ERIA office. The discussion was a part of the National Medium Term Development Plan (RPJMN) 2020-2024 preparation. The aim of the discussion was to share ideas and insight on current strategic issues in manufacturing industry development, particularly from the energy point of view. The output shall be inputs to the draft of the Manufacturing Sector in RPJMN 2020-2024.

The discussion was attended by several groups of participants from Bappenas, ERIA, the Line of Ministry Policymakers, academics, and private sectors. Presenters for the discussion were representatives of Purnomo Yusgiantoro Center (PYC) and of Directorate General (DG) Electricity of the Ministry of Energy and Mineral Resources, while the other participants were from Director of Upstream Chemical Industry of the Ministry of Industry, PT. Pupuk Indonesia, PT. PLN (Persero), PT Perusahaan Gas Negara Tbk, Himpunan Kawasan Industri, PT. PGN LNG, Ministry of Economic Coordinator, and Association of Engineer Indonesia. The event was moderated by Mr. Dionisius Narjoko, the representative of ERIA.

Mr. Luluk Sumiarso, the representative of PYC, was the first presenter of the event. He presented the recent research of PYC on energy in the manufacturing sector and started the presentation by explaining the current condition of energy supply and demand in the manufacturing industry. He pointed out that the energy demand of the industry will be concentrated in the Industrial Estate (KI), Special Economy Zone (KEK), and smelter as they tend to have high energy intensity. He also showed the importance of the availability of energy supply and competitive price to ensure industrial development and competitiveness. He concluded the presentation by mentioning energy issues in the manufacturing sector such as availability of energy supply in some industry, high energy price for industry, and implementation of energy efficiency and conservation measures in the industry. These issues have to be addressed to ensure the growth and competitiveness of the industry.

Mr. Afrizal, as the representative of DG Electricity of Ministry of Energy and Mineral Resource, started his presentation by mentioning the Energy Trilemma, which considers Energy Security, Environmental Sustainability, and Energy Equity, in energy development particularly in electricity development. He pointed out that the government objective is to ensure the people get low electricity prices so that the economy and industry will grow better. He depicted the current condition of Indonesia’s electricity by highlighting current capacity and price point. He compared the price of Indonesia’s electricity price among ASEAN countries. Prices for industrial customer in Indonesia are lower than Thailand, Singapore, and Philippines. However, prices are higher than Malaysia. In the presentation, he explained about the preparation of the new draft of General Plan of National Electricity (RUKN) 2018-2037 which contains National Electricity Policy, Electricity Development Plan, National Electricity Condition, and Electricity Demand Projection which was calculated based on historical data from the supply side. He said that this method, however, has difficulty to predict rapid development and cost reduction of technology.

The FGD was followed by insight sharing from other participants. Many ideas were discussed in this session such as encouraging the industry development close the energy source, need of competitive gas price, and implementation of efficiency and conservation measures in the industry. The discussion was run fruitfully and interactively. Finally, the discussion gave a broad perspective and insightful idea of energy issues in Indonesia’s manufacturing industry.

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