Home Blog 5 Facts About Renewable Energy Investments in Indonesia Business Licenses | Business Setup 5 Facts About Renewable Energy Investments in Indonesia InCorp Editorial Team 31 August 2022 4 minutes reading time Table of Contents The Challenges Behind Renewable Energy Investments 5 Facts about Renewable Energy in Indonesia Energy Investments for Indonesia’s Economy Indonesia shows great intent to transition to renewable energy through various attempts and strategic moves, one of which has been explicitly mentioned by President Joko Widodo, also known as Jokowi. Jokowi has invited G7 countries to invest in Indonesia to smoothen the energy transition plan that spans the next eight years. He continues to emphasize and promote the extraordinary potential of Indonesia below the sea and earth within the Indonesian territory. Retno Marsudi, the Minister of Foreign Affairs, has shared that Indonesia has an apparent and concrete commitment to tackle climate change through the energy transition. She further goes on to share that large amounts of investment are needed to fully recognize Indonesia’s potential. Alongside this, technology transfer is also integral in ensuring success. Thus far, the President elucidates that the transition optimization will help to enhance economic growth, open up business opportunities, and create new jobs. Furthermore, Jokowi has also held at least nine bilateral meetings with various countries, including India, France, and Germany. He has also met with British Prime Minister Boris Johnson, Canadian Prime Minister Justin Trudeau, Japanese Prime Minister Kishida Fumio, and IMF Managing Director Kristalina Georgieva. The Challenges Behind Renewable Energy Investments One of the primary obstacles in transitioning to green energy is the economic value. In terms of investment, energy projects are not economically justified. Due to this, investments in this sector are not as attractive as those in other sectors. Therefore, to ensure that the transition continually occurs, a partnership is an integral part. This is seen through several pilot projects that have begun in Indonesia by big Asian companies. The green industry and projects cannot be treated as usual projects and need special attention in their development. The government can realize the development as Indonesia’s economy progresses and its GDP rises. Consumers can therefore absorb clean energy. Plans of exporting green energy are also in motion despite the products not being cheap yet. The realization target sets for the next 5 (five) years. 5 Facts about Renewable Energy in Indonesia 1. Serious Steps for Transition There are 24 Indonesian provinces that have completed the Regional Energy General Plan. Aside from that, three provinces are also in the process of registering the legislation. One region is currently in discussion with the Ministry of Home Affairs. At the same time, the other three provinces have just started talks with the Regional House of Representatives. 2. Overcoming Challenges The global energy supply is currently disrupted due to current socio-political conflicts that continue to occur. There is a high importance placed on protecting the regional supplies in various regions. 3. Strong Conditions of the Renewable Sector Indonesia is strategically located on the equator, which means that the nation is exposed to abundant sunlight. Indonesia has a lot of wind energy that can be captured by wind power plants and converted into electricity. Indonesia also has a surrounding coastline which can also be developed into electricity. 4. Green Bonds The Indonesian government issued regulations on the usage of greed bonds in 2017, followed by the issuance of the bonds for USD 3 billion in 2018. 5. Low Capacity Green Energy Utilization Indonesia has an abundance of alternative capacity due to the large reserves of geothermal, solar, and wind energy. However, the utilization levels remain low. An example can be seen through Indonesia’s geothermal energy reserves, which have reached 400 gigawatts, but a mere 2.5% has been utilized so far. Energy Investments for Indonesia’s Economy Jakarta is said to have considerable potential from utilizing and managing waste that is then transformed into electricity. The demand for power and electricity in Indonesia continues to increase as the economy grows. The Head of Socio-Economic and Policy at the International Renewable Energy Agency (IRENA) reveals that there is a dire need for policies to be holistic such that they are focused on deploying renewable technology and integrating it with transitional policies and the civil society. Cekindo is a one-stop center for all your business needs. The professionals in Cekindo are capable and experienced in helping various businesses secure their business licenses and import license, which are vital for operations. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions Can investors own shares with preferential rights? Under Indonesian Company Law, shareholders can hold shares with various preferential rights, such as voting rights, nomination rights for board members, priority dividend or liquidation proceeds, and options for conversion or withdrawal after a set period. What are the shareholder rights in a PMA company? Shareholders of a PMA Company in Indonesia have various rights, including voting rights in general meetings, entitlement to dividends and liquidation proceeds, and access to information. They must approve significant matters through general meetings of shareholders with specified quorums, such as: Amending articles of association Changing share capital Appointing or dismissing directors and commissioners Approving major transactions, dividends, and financial statements Company reorganization Can a PMA company keep non-Rupiah bookkeeping and use a language other than Indonesian? For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance. What responsibilities does a PMA company have in terms of non-tax compliance? In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as: Annual financial report Investment realisation report Manpower and employee welfare report Expatriate utilisation report Company loan repot Foreign exchange and prudential principles report However, depending on the business activities and classification relevant authority may require additional reports from a PMA company.