Welcome to the 11th edition of PwC Indonesia’s Oil and Gas in Indonesia – Investment and Taxation Guide. As we write, the world still finds itself in the midst of the COVID-19 pandemic, and so we have decided not to do a full update of our Guide, but rather to focus only on the latest tax and regulatory changes that have occurred from when we issued our last Guide in the last quarter of 2019 up to the end of the third quarter of 2020. The updates have been provided in the form of a summary of changes presented at the beginning of each section. The impact of the COVID-19 pandemic and uncertainty in the macroeconomic situation are the biggest concerns for stakeholders in the oil and gas industry in Indonesia similar to their counterparts around the world. We have attempted to summarise the changes in key regulations the Government of Indonesia has issued as a response in these uncertain times.
In early November 2020 President Joko Widodo signed the Omnibus Law on Job Creation (the Omnibus Law) targeting to reduce red tape and override multiple and contradicting regulations with the overall aim of drawing economic growth and job creation. It will be important to monitor how this landmark legislation will impact the oil and gas sector as implementing regulations are issued. Since both the SKK Migas initiative and the Omnibus Law aim to attract new investment into the oil and gas sector, a clear plan and path toward a more attractive investment ecosystem and necessary fiscal incentives have to be available, and these must be concrete and tangible to ensure the Indonesian oil and gas portfolio provides a viable return for all stakeholders. The paramount concern should be improving reserve replacement, and increasing production, to provide more energy security to the country as demand continues to grow with the expansion of the economy, while production stagnates.
