• Home
  • About RSIS
    • Introduction
    • Building the Foundations
    • Welcome Message
    • Board of Governors
    • Staff Profiles
      • Executive Deputy Chairman’s Office
      • Dean’s Office
      • Management
      • Distinguished Fellows
      • Faculty and Research
      • Associate Research Fellows, Senior Analysts and Research Analysts
      • Visiting Fellows
      • Adjunct Fellows
      • Administrative Staff
    • Honours and Awards for RSIS Staff and Students
    • RSIS Endowment Fund
    • Endowed Professorships
    • Career Opportunities
    • Getting to RSIS
  • Research
    • Research Centres
      • Centre for Multilateralism Studies (CMS)
      • Centre for Non-Traditional Security Studies (NTS Centre)
      • Centre of Excellence for National Security (CENS)
      • Institute of Defence and Strategic Studies (IDSS)
      • International Centre for Political Violence and Terrorism Research (ICPVTR)
    • Research Programmes
      • National Security Studies Programme (NSSP)
      • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
    • Future Issues and Technology Cluster
    • [email protected] Newsletter
    • Other Research
      • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
    • Graduate Programmes Office
    • Overview
    • MSc (Asian Studies)
    • MSc (International Political Economy)
    • MSc (International Relations)
    • MSc (Strategic Studies)
    • NTU-Warwick Double Masters Programme
    • PhD Programme
    • Exchange Partners and Programmes
    • How to Apply
    • Financial Assistance
    • Meet the Admissions Team: Information Sessions and other events
    • RSIS Alumni
  • Alumni & Networks
    • Alumni
    • Asia-Pacific Programme for Senior Military Officers (APPSMO)
    • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
    • International Strategy Forum-Asia (ISF-Asia)
    • SRP Executive Programme
    • Terrorism Analyst Training Course (TATC)
  • Publications
    • RSIS Publications
      • Annual Reviews
      • Books
      • Bulletins and Newsletters
      • Commentaries
      • Counter Terrorist Trends and Analyses
      • Commemorative / Event Reports
      • IDSS Paper
      • Interreligious Relations
      • Monographs
      • NTS Insight
      • Policy Reports
      • Working Papers
      • RSIS Publications for the Year
    • Glossary of Abbreviations
    • External Publications
      • Authored Books
      • Journal Articles
      • Edited Books
      • Chapters in Edited Books
      • Policy Reports
      • Working Papers
      • Op-Eds
      • External Publications for the Year
    • Policy-relevant Articles Given RSIS Award
  • Media
    • Great Powers
    • Sustainable Security
    • Other Resource Pages
    • Media Highlights
    • News Releases
    • Speeches
    • Vidcast Channel
    • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
Facebook
Twitter
YouTube
RSISVideoCast RSISVideoCast rsis.sg
Linkedin
instagram instagram rsis.sg
RSS
  • Home
  • About RSIS
      • Introduction
      • Building the Foundations
      • Welcome Message
      • Board of Governors
      • Staff Profiles
        • Executive Deputy Chairman’s Office
        • Dean’s Office
        • Management
        • Distinguished Fellows
        • Faculty and Research
        • Associate Research Fellows, Senior Analysts and Research Analysts
        • Visiting Fellows
        • Adjunct Fellows
        • Administrative Staff
      • Honours and Awards for RSIS Staff and Students
      • RSIS Endowment Fund
      • Endowed Professorships
      • Career Opportunities
      • Getting to RSIS
  • Research
      • Research Centres
        • Centre for Multilateralism Studies (CMS)
        • Centre for Non-Traditional Security Studies (NTS Centre)
        • Centre of Excellence for National Security (CENS)
        • Institute of Defence and Strategic Studies (IDSS)
        • International Centre for Political Violence and Terrorism Research (ICPVTR)
      • Research Programmes
        • National Security Studies Programme (NSSP)
        • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
      • Future Issues and Technology Cluster
      • [email protected] Newsletter
      • Other Research
        • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
      • Graduate Programmes Office
      • Overview
      • MSc (Asian Studies)
      • MSc (International Political Economy)
      • MSc (International Relations)
      • MSc (Strategic Studies)
      • NTU-Warwick Double Masters Programme
      • PhD Programme
      • Exchange Partners and Programmes
      • How to Apply
      • Financial Assistance
      • Meet the Admissions Team: Information Sessions and other events
      • RSIS Alumni
  • Alumni & Networks
      • Alumni
      • Asia-Pacific Programme for Senior Military Officers (APPSMO)
      • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
      • International Strategy Forum-Asia (ISF-Asia)
      • SRP Executive Programme
      • Terrorism Analyst Training Course (TATC)
  • Publications
      • RSIS Publications
        • Annual Reviews
        • Books
        • Bulletins and Newsletters
        • Commentaries
        • Counter Terrorist Trends and Analyses
        • Commemorative / Event Reports
        • IDSS Paper
        • Interreligious Relations
        • Monographs
        • NTS Insight
        • Policy Reports
        • Working Papers
        • RSIS Publications for the Year
      • Glossary of Abbreviations
      • External Publications
        • Authored Books
        • Journal Articles
        • Edited Books
        • Chapters in Edited Books
        • Policy Reports
        • Working Papers
        • Op-Eds
        • External Publications for the Year
      • Policy-relevant Articles Given RSIS Award
  • Media
      • Great Powers
      • Sustainable Security
      • Other Resource Pages
      • Media Highlights
      • News Releases
      • Speeches
      • Vidcast Channel
      • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
  • instagram instagram rsis.sg
Connect

Getting to RSIS

Map

Address

Nanyang Technological University
Block S4, Level B3,
50 Nanyang Avenue,
Singapore 639798

View location on Google maps Click here for directions to RSIS

Get in Touch

    Connect with Us

      rsis.ntu
      rsis_ntu
      rsisntu
    RSISVideoCast RSISVideoCast rsisvideocast
      school/rsis-ntu
    instagram instagram rsis.sg
      RSS
    Subscribe to RSIS Publications
    Subscribe to RSIS Events

    RSIS Intranet

    S. Rajaratnam School of International Studies Think Tank and Graduate School Ponder The Improbable Since 1966
    Nanyang Technological University Nanyang Technological University

    Skip to content

     
    • RSIS
    • Publication
    • RSIS Publications
    • CO08073 | Indonesia: From Energy Security to Social Security
    • Annual Reviews
    • Books
    • Bulletins and Newsletters
    • Commentaries
    • Counter Terrorist Trends and Analyses
    • Commemorative / Event Reports
    • IDSS Paper
    • Interreligious Relations
    • Monographs
    • NTS Insight
    • Policy Reports
    • Working Papers
    • RSIS Publications for the Year

    CO08073 | Indonesia: From Energy Security to Social Security
    Alvin Chew

    30 June 2008

    download pdf
    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    Commentary

    The global hike in oil prices has not only affected the economies of nations but also caused social disorder with protests breaking out in some countries. Are such demonstrations necessary, and will they be effective in exerting pressure on governments to give in to the demands of the general public?

    THE RECENT spate of protests, including in Indonesia and Malaysia, over the fuel price hike had transformed energy security to one that is destabilizing society. In Indonesia, riots were staged and properties destroyed to protest the cut in fuel subsidies by the government. But the protests this time could not sway the government’s decision to restore the subsidies because oil prices have risen beyond all expectations.

    No Unique Solution

    The global rise in oil prices which has led to an energy crisis is affecting many other nations as well. High oil prices are likely to stay. With factors such as the weakening dollar and rise in global demand for energy, there is no magic formula that could reverse the recent highs in oil prices. Financial institutions investing in fuel commodities will only drive the prices even higher. Oil-producing nations naturally face the dilemma of exporting their resources and offsetting consumers’ growing thirst for alternative energy.Renewables and clean fuel alternatives would seem to be the light at the end of the tunnel, but until they are available on a large scale to be affordable, many nations could be in the doldrums.

    The various strategies for coping with the current energy crunch have to be tailored to the individual needs of the nations. In other words, there is no one-size-fits-all solution. Renewable energy is currently in its infant stage of development, and it is also very unlikely to feature as a big proportion of a nation’s energy mix. Developed nations, concerned with greenhouse gas emissions, see the need to invest in clean technologies and systems that rely less on traditional fossil fuels. Furthermore, policies aimed at energy efficiency and conservation, including carbon trading, would make it very attractive for their industries to create a greener environment. However, such policies will not be attractive to developing nations, whose main motive for economic development inevitably calls for the burning of traditional fossil fuels such as oil, gas and coal.

    Implications of social instability

    The Indonesian government has long heavily subsidised fuel charges, thereby resulting in its locals paying very low fuel prices. However, with increasing oil prices in the international markets, it is unrealistic for the government to continue with the large subsidies. While it was promised that oil prices will not be raised prior to the next general election, the government is expected to save US$3.8 billion this year with the planned reduction in its fuel subsidies. The current call from the Yudhoyono administration to raise the fuel charges came as a response to international market demands, thereby reflecting more realistically the price of oil.

    Furthermore, Indonesia’s withdrawal from the Organisation of Petroleum Exporting Countries (OPEC) has underscored its status now as a net importer of oil. Its presence in OPEC could have very little influence on the oil-exporting market, but it remains to be seen if major oil companies would be willing to invest in boosting its oil production levels.

    Perhaps, the more pertinent question is to whether the 30% price hike in fuel would be justifiable. It was estimated that inaction by the Indonesian government could result in a 13% budget deficit. Its citizens, many whom survived on less than $2 a day, would be impoverished as the fuel price hike will have serious downstream effects leading to higher inflation and worsening living standards. Raising fuel prices will have a greater impact on the middle-income, who are likely to have their own modes of transportation. However, with a society that is still plagued with a history of corruption, the Indonesian government would need to strive harder to pass down the savings from the reduction of fuel subsidies to the majority of its population who form the bulk of the lower income group.

    The protests in Indonesia reflect the government’s inefficiency to control domestic strife, and would have negative impact in attracting foreign investments into the country. Energy is a fungible product that should not be used as a political tool in relations between nations, and in the case of Indonesia, as a tool for the public to threaten national security.

    The greater implication of the social instability in Indonesia is that it could destabilize the surrounding region. One way to strengthen energy security is through cooperative mechanisms that can be implemented region-wide. ASEAN has set the framework and infrastructure to lay out possible cooperative avenues; instability in Indonesia due to price hikes could impede regional energy cooperation. Shared infrastructure can be readily sabotaged in the event of a political discontent. Any future region-wide sharing of strategic commodities could be put under pressure.

    Longer-Term Solution

    The Indonesian government needs to put in place alternative sources of energy that would provide a middle to long-term solution in alleviating high fuel prices. Indonesia has plans to go for nuclear technology or geo-thermal power. However, that vision might take quite a while to materialize. In the current situation of high oil prices, it makes sense for not only Indonesia, but also other fuel importing nations to go for energy conservation and energy efficiency. This is not a long-term solution, but will at least ease the pain of high fuel prices until available technologies arrive. Regardless of a nation’s availability of fuel resources, it is nevertheless a good practice to conserve energy.

    Indonesia is a developing nation that would require base-load power to propel its economy forward. The current available resources to generate base-load power are limited. In striving to develop its economy, it has to view options that not only have impact on the global market prices, but also the global climate. To do it single-handedly and achieve energy independence might not be all that attractive. Working with other nations in the region to foster better energy interdependence would make more sense to leapfrog its economy.

    Indonesia is already hyped as the ‘supermarket’ of natural disasters, plagued by earthquakes and tsunamis in recent years. It can certainly do much better than aggravating the situation with social insecurity, thereby causing unnecessary upheavals in the country — and the region.

    About the Author

    Alvin Chew is a Research Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. Formerly with the Defence Science and Technology Agency, he has been working on defence-related issues and energy security in the Asia Pacific region. 

    Categories: Commentaries / / Southeast Asia and ASEAN

    Last updated on 07/06/2022

    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    Commentary

    The global hike in oil prices has not only affected the economies of nations but also caused social disorder with protests breaking out in some countries. Are such demonstrations necessary, and will they be effective in exerting pressure on governments to give in to the demands of the general public?

    THE RECENT spate of protests, including in Indonesia and Malaysia, over the fuel price hike had transformed energy security to one that is destabilizing society. In Indonesia, riots were staged and properties destroyed to protest the cut in fuel subsidies by the government. But the protests this time could not sway the government’s decision to restore the subsidies because oil prices have risen beyond all expectations.

    No Unique Solution

    The global rise in oil prices which has led to an energy crisis is affecting many other nations as well. High oil prices are likely to stay. With factors such as the weakening dollar and rise in global demand for energy, there is no magic formula that could reverse the recent highs in oil prices. Financial institutions investing in fuel commodities will only drive the prices even higher. Oil-producing nations naturally face the dilemma of exporting their resources and offsetting consumers’ growing thirst for alternative energy.Renewables and clean fuel alternatives would seem to be the light at the end of the tunnel, but until they are available on a large scale to be affordable, many nations could be in the doldrums.

    The various strategies for coping with the current energy crunch have to be tailored to the individual needs of the nations. In other words, there is no one-size-fits-all solution. Renewable energy is currently in its infant stage of development, and it is also very unlikely to feature as a big proportion of a nation’s energy mix. Developed nations, concerned with greenhouse gas emissions, see the need to invest in clean technologies and systems that rely less on traditional fossil fuels. Furthermore, policies aimed at energy efficiency and conservation, including carbon trading, would make it very attractive for their industries to create a greener environment. However, such policies will not be attractive to developing nations, whose main motive for economic development inevitably calls for the burning of traditional fossil fuels such as oil, gas and coal.

    Implications of social instability

    The Indonesian government has long heavily subsidised fuel charges, thereby resulting in its locals paying very low fuel prices. However, with increasing oil prices in the international markets, it is unrealistic for the government to continue with the large subsidies. While it was promised that oil prices will not be raised prior to the next general election, the government is expected to save US$3.8 billion this year with the planned reduction in its fuel subsidies. The current call from the Yudhoyono administration to raise the fuel charges came as a response to international market demands, thereby reflecting more realistically the price of oil.

    Furthermore, Indonesia’s withdrawal from the Organisation of Petroleum Exporting Countries (OPEC) has underscored its status now as a net importer of oil. Its presence in OPEC could have very little influence on the oil-exporting market, but it remains to be seen if major oil companies would be willing to invest in boosting its oil production levels.

    Perhaps, the more pertinent question is to whether the 30% price hike in fuel would be justifiable. It was estimated that inaction by the Indonesian government could result in a 13% budget deficit. Its citizens, many whom survived on less than $2 a day, would be impoverished as the fuel price hike will have serious downstream effects leading to higher inflation and worsening living standards. Raising fuel prices will have a greater impact on the middle-income, who are likely to have their own modes of transportation. However, with a society that is still plagued with a history of corruption, the Indonesian government would need to strive harder to pass down the savings from the reduction of fuel subsidies to the majority of its population who form the bulk of the lower income group.

    The protests in Indonesia reflect the government’s inefficiency to control domestic strife, and would have negative impact in attracting foreign investments into the country. Energy is a fungible product that should not be used as a political tool in relations between nations, and in the case of Indonesia, as a tool for the public to threaten national security.

    The greater implication of the social instability in Indonesia is that it could destabilize the surrounding region. One way to strengthen energy security is through cooperative mechanisms that can be implemented region-wide. ASEAN has set the framework and infrastructure to lay out possible cooperative avenues; instability in Indonesia due to price hikes could impede regional energy cooperation. Shared infrastructure can be readily sabotaged in the event of a political discontent. Any future region-wide sharing of strategic commodities could be put under pressure.

    Longer-Term Solution

    The Indonesian government needs to put in place alternative sources of energy that would provide a middle to long-term solution in alleviating high fuel prices. Indonesia has plans to go for nuclear technology or geo-thermal power. However, that vision might take quite a while to materialize. In the current situation of high oil prices, it makes sense for not only Indonesia, but also other fuel importing nations to go for energy conservation and energy efficiency. This is not a long-term solution, but will at least ease the pain of high fuel prices until available technologies arrive. Regardless of a nation’s availability of fuel resources, it is nevertheless a good practice to conserve energy.

    Indonesia is a developing nation that would require base-load power to propel its economy forward. The current available resources to generate base-load power are limited. In striving to develop its economy, it has to view options that not only have impact on the global market prices, but also the global climate. To do it single-handedly and achieve energy independence might not be all that attractive. Working with other nations in the region to foster better energy interdependence would make more sense to leapfrog its economy.

    Indonesia is already hyped as the ‘supermarket’ of natural disasters, plagued by earthquakes and tsunamis in recent years. It can certainly do much better than aggravating the situation with social insecurity, thereby causing unnecessary upheavals in the country — and the region.

    About the Author

    Alvin Chew is a Research Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. Formerly with the Defence Science and Technology Agency, he has been working on defence-related issues and energy security in the Asia Pacific region. 

    Categories: Commentaries

    Last updated on 07/06/2022

    Back to top

    Terms of Use | Privacy Statement
    Copyright © S. Rajaratnam School of International Studies. All rights reserved.
    This site uses cookies to offer you a better browsing experience. By continuing, you are agreeing to the use of cookies on your device as described in our privacy policy. Learn more
    OK
    Latest Book
    CO08073 | Indonesia: From Energy Security to Social Security

    Commentary

    The global hike in ...
    more info