Import of liquified petroleum gas has been increasing in the past year, adding to the country's trade deficit. (GA Photo/Mohammad Defrizal)

Omnibus Law to Revise Coal DMO Rule


NOVEMBER 11, 2019

Jakarta. The government's plan to issue an omnibus law to revise all regulations in the economic sector will include stipulations to encourage coal gasification, Coordinating Minister for the Economy Airlangga Hartarto said on Sunday. 

The government has been encouraging coal producers to turn their coal into dimethyl ether gas that can be used to replace liquified petroleum gas, the import of which has been growing in the past year, adding to the country's trade deficit. 

But, the coal producers say they are being bogged down by the domestic market obligation (DMO) rule that requires them to sell a quarter of their production to local companies, often at prices lower than in the global market.

That makes pursuing gasification hardly feasible, they argue.  

"For this reason, there must be a change in policy, where gasification is no longer subject to additional burdens from the DMO rule. We'll put this in the omnibus law," Airlangga said. 

President Joko "Jokowi" Widodo promised a sweeping legislation reform in his address to the nation in August.

Jokowi said the government will create two omnibus laws – on job creation and empowerment of small and medium enterprises – that will revise or simplify many overlapping laws and regulations.   

The government will also use the omnibus laws to cut tax, providing incentives for businesses amid sluggish global economic growth.

"These incentives are expected to help our economy expand. First we want to expand the tax base," Airlangga said. 

"Going forward, we aim to improve the investment climate. All our efforts will go to bringing in more investment," Airlangga said.