Power issues could put brake on Indonesia’s economic boom

Falling short of meeting the rising energy requirements of its businesses, threatens to stall the economic growth of Indonesia.

Nearly half of 13,000 companies surveyed by The Asia Foundation, a San Francisco-based NGO, in 2010-11 experienced power outages at least three times a week. In addition, a 2011 World Bank report ranks the country 161st among 183 countries in the ease of businesses receiving a reliable power supply, with worse grades than Congo and Albania.

Poor transport links in the archipelago also hamper efficient movement of coal and a lack of pipelines prevent the country from utilising but a small percentage of its rich natural gas deposit to power industries.

“Indonesia needs to improve access to energy for the smaller islands to diversify the sources of growth now concentrated in greater Jakarta and Java,” said Ferry Wong, head of research at Citigroup Securities Indonesia.