Ethanol Tax Under Scrutiny: Aiming to Boost Indonesia’s Bioethanol Industry

JAKARTA, RAKYAT NEWS – The National Energy Council (DEN) of Indonesia has expressed concerns that the current ethanol tax is hindering the development of the bioethanol industry by driving up prices.

To address this issue, DEN is set to collaborate with the Ministry of Energy and Mineral Resources and the Ministry of Finance to discuss the potential elimination of this tax.

DEN member Abadi Poernomo highlighted that the price of ethanol is currently around IDR 15,000 per liter, but with the tax in place, it rises to IDR 20,000.

“The taxation initially aimed to regulate alcoholic beverages, but its impact on bioethanol is counterproductive to Indonesia’s goals of achieving net zero emissions,” he stated in Jakarta, October 9, 2024.

Bioethanol, a renewable fuel produced from organic materials like sugarcane and soybeans through fermentation, is considered a vital component in Indonesia’s energy transition. However, discussions on removing the ethanol tax are complex.

There are concerns about potential misuse in other industries, particularly in the production of alcoholic beverages.

Poernomo emphasized the need for effective oversight if the tax is abolished.

“If the tax is removed, how will we prevent its misuse in the liquor industry? This is a significant challenge for us.”

The government’s commitment to bioethanol is outlined in the Revised Government Regulation on National Energy Policy, which proposes an initial blending of bioethanol at 1% with fossil fuels. (Uki Ruknuddin)