Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan said the government plans to form a task force to improve the investment climate in the upstream oil and gas sectors.
Later this task force will cooperate with other relevant ministries.
Luhut said this step was taken because the upstream oil and gas sector is currently considered not to stimulate investors to invest their money in Indonesia.
The basic issues that are emphasized are related to the regulation of the upstream oil and gas sector, which until now still uses the old rules, aka it has not been adjusted to current developments.
"So we are making a task force (task force) for that. (Satgas) to see the rules. We spoke with the Ministry of Finance and so on," said Luhut in Jakarta, Wednesday, July 31.
Luhut said, Indonesia should be able to provide more attractive incentives.
The reason, he said, is that Indonesia is currently still implementing a profit-sharing contract with a cost recovery scheme with a distribution of 85:15.
He then gave an example of the upstream African oil and gas sector which was considered better than Indonesia with a 60 percent profit-sharing scheme for the state and 40 percent for oil and gas companies.
For that, he said, incentives are needed in this industry so that it can increase Indonesia's competitiveness in the eyes of investors.
"We have to give better incentives. Now I see that Africa is even better than us. Africa has already given 60:40. We are still 85:15," said Luhut.
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In addition to the result-sharing contract which is considered too small, Luhut also highlighted regulations that were considered too convoluted, making it difficult for investors to enter.
"Now there are a lot of large oil and gas from the sea, deep sea. The regulations are still the same. Yes, that's not true. Yes, we are fixing it now," concluded Luhut.
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