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
As the government scrambles to shore up tax and excise revenues, a wave of corruption arrests targeting tax and customs officials has exposed deep governance problems within Indonesia’s revenue-collecting agencies. The Corruption Eradication Commission’s (KPK) recent raids have prompted Finance Minister Purbaya Yudhi Sadewa to carry out large-scale bureaucratic rotations at both the tax and customs offices. Yet questions remain over whether these measures can deliver lasting reform or meaningfully improve revenue collection.
Over the past weeks, the KPK has conducted a series of operations across multiple regions. On Wednesday last week, investigators arrested three officials in Banjarmasin, South Kalimantan, including the head of the medium tax office (KPP Madya), on suspicion of bribery and gratification. The alleged payments were intended to facilitate the approval of multibillion-rupiah tax restitution claims submitted by palm oil plantation companies.
On the same day, the KPK also arrested customs and excise officials in Jakarta and Lampung over alleged irregularities in import inspection activities. Investigators seized evidence including 3 kilograms of gold and Rp 8.19 billion (US$496,000) in cash. Among those detained was the head of the West Sumatra customs and excise office, a former director of customs investigation and enforcement.
The latest cases follow earlier arrests this year involving eight officials from the North Jakarta regional tax office. The officials were accused of accepting bribes worth Rp 6 billion in exchange for allowing PT Wanatiara Persada to pay only Rp 15.7 billion in taxes and Rp 4 billion in fees, far below its original tax obligation of Rp 75 billion.
In response to the string of scandals, Purbaya has pledged sweeping internal reforms to restore credibility within the Finance Ministry. He recently rotated 50 high-ranking officials at the Directorate General of Taxes (DJP) and reassigned 30 officers at the Directorate General of Customs and Excise (DJBC), a move aimed at tightening governance and boosting revenue performance.
The large-scale reshuffle, according to Purbaya, was unavoidable. Under existing regulations, he said, officials implicated in misconduct cannot be immediately dismissed before legal proceedings are concluded, leaving reassignment to lower-risk positions the only short-term option to limit further damage.
The renewed reform push comes at a critical fiscal juncture. In 2025, tax revenue reached only 87.6 percent of its target, amounting to Rp 1,917.6 trillion out of Rp 2,189.3 trillion target. As a result of weaker-than-expected revenue, the budget deficit widened to Rp695 trillion, or 2.92 percent of gross domestic product, close to the legal ceiling of 3 percent. Despite this shortfall, the 2026 state budget sets an ambitious tax revenue target of Rp 2,357.7 trillion, a 22.9 percent increase from last year’s realization.
With global geopolitical uncertainty intensifying and Indonesia’s economic growth stuck at around 5 percent for much of the past decade, meeting this year’s revenue target will be a formidable challenge. Purbaya has sought to reassure markets and the public that governance reforms at the tax and customs offices will gradually strengthen revenue performance, expressing confidence that the deficit will remain below the 3 percent threshold. Many economists and investors, however, remain cautious.
