If the government does not issue a special regulation, the Petronas, British Petroleum, Shell and other foreign SPBUs will control the domestic market instead of state-owned oil and gas firm Pertamina.
Yogyakarta (ANTARA News) - The government should issue a special regulation to limit the growth of foreign refueling stations (SPBU) and encourage the development of domestic ones instead, an economist said.

"If the government does not issue a special regulation, the Petronas, British Petroleum, Shell and other foreign SPBUs will control the domestic market instead of state-owned oil and gas firm Pertamina," economist Sri Adiningsih of the Gadjah Mada University (UGM) stated here on Tuesday.

Following the Indonesian governments policy to cut its subsidy for fuel oils, she added, foreign investors will become more aggressive in developing their SBPUs in the country.

With the governments move to slash the subsidy, these foreign SBPUs will offer competitive prices and maximal services, Adiningsih pointed out.

"Foreign investors should not be allowed to capitalize on the subsidy reduction as it will cause fuel oil prices at home to increase," the UGM economist explained.

To prevent that from occurring, the government should encourage Pertamina to increase the competitiveness of and give incentives to its local retailers, or SPBUs, to give them a chance to provide better services to consumers.

Pertamina needs to ensure this, considering that the limitation on the number of foreign SPBUs is not maximal, with the law on oil and gas still leaving room for foreign retailers to expand businesses in Indonesia.

In addition, the implementation of the ASEAN Economic Community (AEC) at the end of 2015 will narrow the chance to impose any such limitations.

"Pertamina should continue to make improvements to ensure that SPBUs in the region are not controlled by foreign investors," Adiningsih remarked.

Besides strengthening local SBPUs, the government should also reinforce other business sectors to reduce Indonesian economic dependence on foreigners.

"High dependence of the Indonesian economy on foreigners will add to the volatility of the value of rupiah," she cautioned.(*)

Editor: Heru Purwanto
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