Energy-Industry Policy: Towards Sustainable Growth

Jakarta (ANTARA) - The year 2026 is not yet complete, yet Indonesia’s economy is already confronted with a series of severe challenges. Data from the World Economic Forum (WEF) indicates that Indonesia now ranks 40th out of 69 countries in the World Competitiveness Ranking (WCR) 2025, a significant decline from 27th the previous year. In education, Indonesia ranks only 62nd, while in health and environment, it is 63rd. The effectiveness of government institutions manages only 51st place. The LPEM FEB UI Economist Survey for the first semester of 2026 also confirms this: the majority of the 85 economists involved assess the economic condition as tending to worsen or stagnate. Inflation expectations are rising, consumer purchasing power is threatened, and the rupiah exchange rate once touched Rp17,000 per US dollar. Amid all this, the government has chosen to hold subsidised fuel prices, a step that helps control inflation and maintain logistics costs, but also risks burdening the state budget if not managed carefully. Furthermore, the Global Risks Report 2025 from the WEF reveals that global business leaders are concerned that Indonesia will face five major risks in the next two years: adverse impacts from artificial intelligence (AI) developments, economic weakening, poverty and inequality, extreme weather, and food supply shortages. These risks, if not anticipated, could exacerbate existing pressures. Meanwhile, in the energy sector, the WEF’s Energy Transition Index 2025 places Indonesia at 58th out of 120 countries, down four positions from the previous year and below Vietnam, Malaysia, and Thailand. Dependence on fossil energy and the suboptimal policy of the Certain Natural Gas Price (HGBT) are key notes. However, the transition to a green economy opens up great opportunities, with projections of creating up to 1.3 million new jobs in the renewable energy sector by 2050, as cited from the WEF’s Future of Jobs Report 2025. Global Challenges The data above reinforces that the biggest test currently comes from external factors. The United States’ reciprocal tariffs reaching 19 per cent have struck Indonesia’s mainstay export sectors, such as the metal, machinery, transportation equipment, electronics (ILMATE), textile, and footwear industries. At the same time, illegal goods from various countries are flooding the domestic market: second-hand clothing (thrifting), children’s toys without SNI standards, to electronic products without customs documentation.