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The Minister Of Industry: The Implementation Of HGBT Supports Achieving 8% Economic Growth
Tuesday, 28 Jan 2025
The Specific Natural Gas Price Policy (HGBT) for the industrial sector will continue to be implemented in 2025. This decision is a positive development for the industry, as it not only ensures business certainty and competitiveness but also attracts investment in Indonesia.
From 2020 to 2023, the positive impact of HGBT on the industrial sector reached Rp247.26 trillion, which includes an increase in exports of Rp127.84 trillion, an increase in tax revenue of Rp23.3 trillion, and a reduction in fertilizer subsidies of Rp4.94 trillion. "The HGBT policy for the industry also adds six times more value," said Minister of Industry Agus Gumiwang Kartasasmita in Jakarta on Saturday (January 25).
Therefore, the Minister emphasized that the implementation of HGBT is crucial for supporting the economic growth target of 8 percent under President Prabowo Subianto's administration. To achieve this target, the manufacturing sector is expected to contribute 21.9% to the national GDP from 2025 to 2029.
Looking at the performance of the non-oil and gas processing industry, in the third quarter of 2024, this sector remains a key contributor to Indonesia's GDP, with a contribution of 17.18% and a growth rate of 4.84%. Additionally, its export value in 2024 reached USD196.55 billion, accounting for 74.25% of total national exports. Investments in the non-oil and gas industrial sector amounted to Rp515.7 trillion, representing 40.9% of total national investment. The sector also employed 20.01 million people in 2024.
"The non-oil and gas processing industry significantly contributes to our economy, so we need to continue strengthening and ensuring its growth. Maximum support is needed to optimize its performance, one of which is through the continued implementation of HGBT," the Minister stated.
According to the Minister of Energy and Mineral Resources Decision Number 255K of 2024 regarding certain natural gas users and prices in the industrial sector, there are seven industries receiving HGBT. These include the fertilizer industry (4 companies), petrochemical industry (56 companies), oleochemical industry (10 companies), steel industry (67 companies), ceramics industry (69 companies), glass industry (18 companies), and rubber glove industry (4 companies), totaling 228 companies with a quota of 890.24 BBTUD.
In 2023, the absorption of natural gas reached 80.10%. The low gas absorption by industrial users is due to surcharges imposed by suppliers and the gas quota under HGBT. Once the quota is exhausted, gas prices rise to market rates, leading industries to reduce their HGBT consumption, as explained by Agus.
Industries benefiting from HGBT find it easier to operate. The ceramics industry has notably increased its production, ranking 4th among the largest ceramic producers globally in 2024, up from 8th in 2019. From 2020 to 2024, state revenue from taxes rose by 49%, from Rp1.7 trillion to Rp2.6 trillion.
However, there are still challenges in HGBT absorption. First, the regasification gas price offered by PGN is USD16/MMBTU, about 2.5 times higher than HGBT. Additionally, there are quota restrictions calculated daily or monthly with surcharges. In 2024, the quota is set at 60% of the contract in West Java. Furthermore, some industries designated as HGBT recipients, like PT Pupuk Iskandar Muda (PIM), have not yet received their natural gas supply, which is 40 BBTUD.
"Most HGBT recipient industries, over 95%, are paying gas prices above the set rate (over USD6.5/MMBTU)," Agus stated.
