Sector
Energy
Indonesia possesses vast, distributed, and diverse energy resources. The country’s energy subsectors include gas, clean water, and electricity, with demand projected to increase to 464 terawatt-hours (TWh) by 2024 and further increase to 1,885 TWh by 2060. The use of renewable energy is a top priority and the government has set ambitious goals in the General Planning for National Energy (RUEN) and General Planning for National Electricity (RKUN) to integrate 23 percent renewable energy into the national energy mix by 2025. At least US$41.8 billion of investments are needed to fully realize the goal.
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Energy
Indonesia possesses vast, distributed, and diverse energy resources. The country’s energy subsectors include gas, clean water, and electricity, with demand projected to increase to 464 terawatt-hours (TWh) by 2024 and further increase to 1,885 TWh by 2060. The use of renewable energy is a top priority and the government has set ambitious goals in the General Planning for National Energy (RUEN) and General Planning for National Electricity (RKUN) to integrate 23 percent renewable energy into the national energy mix by 2025. At least US$41.8 billion of investments are needed to fully realize the goal.
Despite having a renewable energy potential estimated at around 3,000 gigawatts (GW), current utilization is merely about 12.74 GW or 3 percent. This renewable energy potential includes solar energy, which is widely spread across Indonesia, especially in East Nusa Tenggara, West Kalimantan, and Riau, with a potential of approximately 3,294 GW and utilization of 323 megawatts (MW). Another renewable energy, hydro energy, with a potential of 95 GW, is primarily found in North Kalimantan, Aceh, West Sumatra, North Sumatra, and Papua, with utilization reaching 6,738 MW.
Additionally, bioenergy, encompassing biofuel, biomass, and biogas, is distributed throughout Indonesia with a total potential of 57 GW and utilization of 3,118 MW. Wind energy (>6 m/s) found in East Nusa Tenggara, South Kalimantan, West Java, South Sulawesi, Aceh, and Papua has a substantial potential of 155 GW, with utilization of 154 MW.
Furthermore, geothermal energy, strategically located in the “Ring of Fire” region covering Sumatra, Java, Bali, Nusa Tenggara, Sulawesi, and Yogyakarta has a potential of 23 GW and utilization of 2,373 MW. Meanwhile, marine energy, with a potential of 63 GW, especially in Yogyakarta, East Nusa Tenggara, West Nusa Tenggara, and Bali, remains untapped.
Among the renewable energy sources and their potential, these projects entail significant investments. According to the Electricity Supply Business Plan (RUPTL) of the State Electricity Company (PLN), from 2021 to 2030, geothermal power plants require an investment of US$17.35 billion, large-scale solar power plants necessitate US$3.2 billion, hydropower plants require US$25.63 billion, and base renewable energy power plants require US$5.49 billion. Additionally, bioenergy power plants require an investment of US$2.2 billion, wind power plants US$1.03 billion, peaker power plants US$0.28 billion, and rooftop solar power plants IS$3 billion.
As of 2022, hydro and geothermal are the primary drivers of growth. Private entities had enhanced the capacity of hydro power by adding 603.66 MW in mini, micro, and standard hydro facilities, reaching a total of 2,459.72 MW. Meanwhile, the geothermal sector experienced a 412 MW increase over the last five years from the private sector, bringing the total capacity to 1,782.8 MW by 2022. Aside from these two renewable energy, sources solar energy has also presented significant opportunities, particularly given Indonesia's potential for floating solar systems on reservoirs and dams.
Furthermore, the country’s other national energy subsector of gas underscores Indonesia’s wealth in natural gas. Indonesia’s natural gas reserves are predominantly methane (80-95 percent), which can be used directly or processed into Liquefied Natural Gas (LNG). However, demand has greatly increased over the past decade for Liquefied Petroleum Gas (LPG). From 2018 to 2022, domestic LPG production reached between 1.9 to 2 million tons, which is insufficient to meet national needs, leading to increasing imports that reached 6.74 million tons in 2022.
Currently, the Energy and Mineral Resources Ministry is working to attract new investments for LPG refineries through a cluster-based business scheme for the construction or future development of new LPF refineries. The ministry has identified the potential of rich gas to produce an additional 1.2 million tons of LPG cylinders domestically.
Latest News
The new Labor Protection Law, approved by the House of Representatives on Oct. 6, promises stronger severance entitlements, tighter dismissal rules and greater employment security. But stronger legal protections mean little if employers circumvent restrictions on temporary employment or fail to pay compensation. The real test of the new law lies not in its promises but in whether its provisions translate into effective protection for workers when their livelihoods are most vulnerable.
The legislation moved from a House initiative to final approval in less than six weeks after formal deliberations began on Sept. 14. This compressed timetable enabled lawmakers to meet the Constitutional Court’s deadline but left little time for public scrutiny of its 313 articles. Consultations were held, but assessing their significance requires understanding how competing proposals were considered and incorporated.
Transparency over the agreed provisions is therefore essential. Pending access to the final text, government and union explanations provide a basis for assessing the reform’s direction, although its precise obligations and safeguards still require verification.
Manpower Minister Yassierli outlined 13 areas of reform covering employment protection, workforce development and enforcement. These include paid maternity and miscarriage leave, safeguards for workers with disabilities, a prohibition on withholding job applicants’ diplomas and protections for job seekers, trainees and apprentices. Other measures address flexible work arrangements, outsourcing at state-owned enterprises, competency certification, employment data and wage-setting institutions. Additional labor inspectors and a Labor Inspection Committee are intended to strengthen enforcement.
Across these reforms, two tests stand out: whether workers receive compensation when their employment ends and whether restrictions on temporary employment arrangements improve job security.
Severance protection brings the first test into focus. According to government explanations, the new law has removed a provision allowing severance payments to be reduced to half the prescribed amount. This strengthens workers’ financial entitlements, but a larger entitlement provides limited relief if payment remains uncertain.
The proposed severance reserve could address that gap by requiring funds to be set aside before dismissal occurs. Advance funding would reduce workers’ dependence on an employer’s financial condition at a time when its resources may already be depleted. It could also make employment costs more predictable for businesses by spreading funding obligations over time.
The reserve’s effectiveness, however, depends on its design. Contributions must reflect payment obligations, accumulated funds must be protected if an employer becomes insolvent, and workers need a clear mechanism for receiving timely payments. An accounting provision on a company’s balance sheet would not offer the same security as funds held separately and protected for workers.
Implementing regulations must establish how the reserve is funded, safeguarded and accessed, with consequences for employers that fail to contribute. They must also clarify how payments will be made when an employer disputes a dismissal or the amount owed. Otherwise, funds could be available while workers remain unable to access them.
Temporary employment presents a different challenge. Government and union explanations indicate that fixed-term contracts will be limited to four years and apprenticeships to six months. These limits could constrain prolonged temporary employment arrangements, but restricting the duration of individual contracts or placements does not necessarily change how employers fill permanent staffing needs.
