Prolonged Iran-US War: Purbaya Wants to Reduce Indonesia's Fuel Consumption
Jakarta, CNBC Indonesia - Finance Minister Purbaya Yudhi Sadewa has revealed the primary reason for now agreeing to allocate budget incentives for electric vehicles in June 2026, after previously being reluctant to provide stimulus to that industrial sector.
He stated that the main reason for the change in his incentive policy direction is the potential for the Iran conflict with the United States (US) and Israel to be prolonged, accompanied by the continuously rising global crude oil prices.
“Because we see that global oil prices won’t go down. After I went to America, I studied how America conducts discussions and designs the terms given to Iran. It seems like the design is for a country that lost the war, and it will certainly be rejected by Iran. So it looks like the ecology of that war will still be long,” said Purbaya at his office in Jakarta on Tuesday (12/5/2026).
If there is no policy intervention that changes society’s energy consumption patterns from the current dominance of consuming fuel oil to electricity, it will continue to have the potential to cause ripple effects of price increases domestically, offsetting the high global fossil energy prices.
“That means our fuel consumption will still be high, and at higher prices. So if I can shift it to electricity, that will significantly reduce our imports, right?” he explained.
On the other hand, he emphasised that the domestic electricity supply is now very abundant, because there is still 30% of production capacity that is unused but still has to be paid for its production costs by the state.
“That’s maybe the capacity that’s only used around 70%, there’s still 30% of electricity that we pay for but isn’t used. If I’m not mistaken, but you can discuss it with PLN. But clearly there’s electricity that’s produced that we pay for, I want to use that so that the subsidies at PLN decrease, fuel subsidies also decrease, that’s the main thing,” said Purbaya.
Purbaya said that initially he predicted the Iran and US conflict would end in September 2026 considering the midterm elections in the US. But with the development of conflict resolution negotiations showing no bright spot, he assessed that this conflict could still continue.
“The best is for it to end in September, because there are elections there in the United States. But it could continue, so we will keep watching. But in the next few months, I will economise on that,” said Purbaya.