JAKARTA (TheInsiderStories) - The Indonesian government has announced the new Economic Policy Package, which the eighth issued in the last three months which consists of one map policy, the policy to accelerate the development of oil refineries and incentives to stimulate the growth of maintenance, repair and overhaul (MRO) for aircraft in domestic market.
The Coordinating Minister for the Economy Darmin Nasution said when announcing the new policies that the one-map policy will resolve overlapping of land usage. Often, he said, the development of infrastructure in one area or economic zones could not be realized due to conflicting land usage purpose. The conflict was triggered by overlapping of Information on Geo-Spatial Theme (IGT).
The map will be based on one geo-spatial reference, one basis data and one geo-portal in order to speed up national development, he said.
“This will create business certainty. Various information compiled in the map can be used for various purpose, including to mitigate natural disaster,” Darmin said.
Oil Refinery
The new policy package was also launched to speed up the realization of the development of oil refineries which has been delayed for years. The development new refineries is needed in order to reduce dependency on imported fuels (BBM).
“The new policy on refinery will be regulated under the Presidential Regulation (Perpres),” he said.
He noted the rising fuel demand from domestic market will widen the gap between the fuel processed in domestic refineries than imported fuel. The gap could widen to 1.2-1.9 million barrels per day in 2025 should the country only rely on existing refineries.
The last oil refinery constructed by Pertamina was 21 years ago, namely Balongan refinery in 1994 with capacity of 125,000 barrels per day. Indonesia, he said, needs to develop new refinery with capacity of 300,000 bpd.
He said in order to realize the construction of new refineries, the government will offer fiscal and non-fiscal incentives. “The development of new refineries should be as much as possible integrated with petrochemical complex,” he said.
MRO
The government also issues new policies to stimulate the growth of domestic maintenance, reparation and overhaul (MRO). Currently, Garuda Maintenance Facility (GMF) is dominant player in domestic MRO. However, its facilities could not handle all MRO demand from airliners. Therefore, many aircraft operators use overseas MRO services.
The imported tax on imported aircraft components also makes domestic MRO to be less competitive then in MRO business in the region.
He said MRO services requires speedy process in importing components to repair aircraft as components have to be certified by aircraft makers such as Boeing and Airbus.
Therefore, the government provides incentives in the form of zero imported levies on 21 tariff posts of aircraft components. “This policy will provide business certainty for national airliners with regard to aircraft maintenance as well as at the same time stimulate industry players to produce aircraft components domestically. (*)