Indonesia is striving to maximise the use of bio-diesel as part of efforts to reduce imports of oil and gas to reduce trade deficit in a long term.
“We are trying to reduce the burden of deficit in the oil and gas balance of trade by among others consistently using bio-diesel,” Coordinating Minister for Economic Affairs Hatta Rajasa said here on Thursday.
He said the government has issued a package of economic policies requiring the use of bio-diesel in August 2013, to save US$3.5 billion in foreign exchange and reduce spending for energy subsidy in 2014.
The package that requires the use of bio-diesel up to 10 per cent is also aimed at reducing oil and gas imports, which has significantly contributed to the current account deficit for the past 26 months, he said.
Apart from that he said the government also wished to build refineries at home to meet the countrys oil and gas demand and avoid dependence on imports.
“Our use of fuel oils rises eight per cent a year and it is not impossible that fuel oil supply in the world would be more limited. So when we talk about building refineries we also talk about the countrys supply security. So we must lead it so that it will work well,” he said.
Other efforts to reduce the countrys current account deficit is the government would encourage non-oil/gas exports and reduce imports of capital goods by providing incentives for companies developing raw materials-based industries in the country, he said.
“To reduce our industries dependence on supporting materials we must give attractive incentives to encourage development of industries to produce intermediate goods to reduce dependence on imports. We must immediately do it and overcome it,” he said.
Hatta assured there would be reduction of exports especially exports of raw materials following the implementation of the law on coal and minerals.
When the processing industries are effective Indonesias exports would certainly increase and there would be a surplus in the trade balance by 2017, he said.
The Central Bureau of Statistics Indonesia suffered a deficit of US$430.6 million in its trade in January 2014 with its exports reaching US$14.48 billion and imports US$14.92 billion.
One of the factors that contributed to the deficit was oil and gas imports which reached US$3.55 billion while exports of oil and gas only reached US$2.49 billion.
