Ministry of Industry Regulation No 33/2013 on Development of Energy Efficient and Affordable 4 Wheel Vehicle (KBH2) was issued to implement the Government Regulation No. 41/2013 on Taxable Luxury Goods being motorized vehicle. The ministry’s intention was to help middle-low income people to change their motorcycles with affordable cars. To avoid a flux in CO2 emission and to safe the fuel subsidy, the affordable cars must also be fuel efficient. To ensure that the affordable cars will not significantly increase carbon emission, the combustion engine is limited to 1200 cc for a petrol engine or 1500 cc for a diesel one. At the moment the efficiency level is set at 20 km / liter. While to define affordable itself, the Government set a maximum price of IDR 95 millions.

This is actually a well planned policy with a good objective of reducing the risk of accidents resulted from too many passengers carried on a motorcycle. Unfortunately, for traffic congested cities, like Jakarta, this seemingly noble policy was not accepted wholeheartedly. While he was the Jakarta Governor, Jokowi announced to introduce a set of traffic regulation to unravel chronic traffic jams in Jakarta, from ERP (Electronic Road Pricing), Odd-even car plate number restrictions, and a special tax to discourage people from buying and using such cheap and cheerful LCGC or to be accurate KBH2 cars. Unfortunately, the regulations are not popular so that even though such limitation has been prepared since a long time ago, it will need a strong leader to implement them altogether at the same time. Afraid of being accused of ERP being too commercial while Jakarta is a rich province; the governor decided to implement the odd-even restriction first, amids the risk of providing another motivation to have a second odd/even plate car.

Furthermore, the policy of providing affordable LCGC cars has recently been challenged by inflation or the depreciation of Rupiahs. One of the main reasons in that actually LCGC which was set at a maximum price of IDR 95 millions has an exception, i.e. the price may increase if there is an improvement in technology and safety features. This exception has been misused, if not abused, as in reality the LCGC price has been increase substantially from IDR95mio. On average, the LCGC rprice is between IDR 120 and 130 millions, with the highest price of IDR 163,5 millions. In combination with the increasing living costs, many believe that the LCGC policy is no longer effective and call for a revision to mirror the development reality. It is hoped that the revision will no longer the size of engine and its efficiency, but instead the size of GHG emission, especially CO and CO2. This is basically due to the fact that the better is the combustion, the more efficient is the engine, and the less is its carbon emission. But instead of limiting the input or the process, it is best to limit the output.


The technology of electric vehicle has now been equal if not exceeding that of fossil fuel one. There is no gap in engine performance, acceleration, noise, vibration, emission, and others, except for its betterment. In Indonesia, however this condition does not affect the automotive consumer behaviour despite the global trend of going green. The current policy seems to still take side on the brown automotive products which can be shown by the electric vehicle price which is more expensive than that of fossil fuel vehicle. Similarly, the price of hybrid cars are doubled the price of fossil fuel cars.

At the opening of GIIAS 2019, Minister of Finance Sri Mulyani Indrawati said the government had prepared various incentives through a Presidential Regulation on Accelerating the Battery-Based Electric Vehicle Program and Government Regulation on Motor Vehicle VAT, which will be signed by President Joko Widodo this week.

Sri Mulyani revealed that the government would provide several incentives related to the development of electric cars, including imports of electric vehicles given within a certain period of time, as well as providing tax allowances for the spare parts industry.

The government will also provide tax holiday facilities for the integration of electric vehicles with batteries, import duties borne by the government for the import of electric vehicles that get their facilities and raw materials, as well as ease of imports for export purposes.

Meanwhile, for tax incentives on cars, the government will provide tax breaks for sedan vehicles, where the sedans have been taxed higher than MPV vehicles. The regulation of PPnBM will be neutral against types of cars. Once, the sedan type was considered more luxurious than MPV one. The grouping is now divided by engine size: under 3,000 cc, between 3,000 cc – 4000 cc and above 4,000 cc.

Sri Mulyani hopes that with the introduction of the two incentives in the automotive sector, exports can increase to 1 million units from currently only around 300,000 units per year.

Well, we always for the best, but even if these two incentives could not boost car export to 1 million units, Government already gave the right signal to the automotive industry that the new technology of euro 4 engine is appreciate as well as the introduction of EV. Hence, we say welcome to EV, and goodbye to Euro 2 FV.

The Indonesian Downstream Oil and Gas Supervisory Agency (BPH Migas) issued circulation letter on Subsidised Diesel and Gasoline Limitation to the State Oil Company Pertamina, AKR Corporindo, and Surya Parna Niaga in order to ensure that the threshold of 46 million kilo liter of subsidised fuel could be sufficient until the end of this 2014 fiscal year.

The plan of limiting the consumption of the subsidised fossil fuel involves:

  1. No more subsidised diesel sold in all gas stations (SPBU) in Central Jakarta since 1st August 2014;
  2. The selling hours for subsidised diesel in all SPBUs in Java, Sumatera, Kalimantan, and Bali have been limited from 8:00 to 18:00 for several clusters since 4th August 2014. Such clusters are focused on industrial estate, mining, and plantation and other areas fragile to subsidised diesel abuse. While for SPBUs located on the main logistics distribution, subsidised diesel selling hours will not be limited. Areas already limiting consumption or selling hours such as Batam and Bangka and major parts of Kalimantan will continue imposing limitations regulated by the local government; 
  3. Subsidised diesel for fishermen through their distribution association (SPBB/SPBN/SPDN/APMS) has been cut by 20% since 4th August 2014 and its distribution prioritises those below 30 gross tonnes fisherman boats. There are rather frequent subsidised diesel smuggling bound for Singapore being stopped by the customs or the water police hence the risk;
  4. All SPBUs located on toll roads have not sold subsidised gasoline anymore since 6th August 2014, and they only sell Pertamax series. Up to now, there are 29 SPBUs on toll roads and 27 of them are in Marketing Operation Region III (West Java) and 2 others are in Marketing Operation Region V (East Java).

Initially, the Indonesian government planned to use RFID (Radio Frequency ID) to control the consumption of subsidised fuel in all private and public cars. Pertamina has worked with INTI, a subsidiary of Telkom state owned telecom company installing RFID chips that will connect to its scanners at SPBU to all cars in Jakarta as a pilot city. In my opinion, this is very fair to the car owners and very manageable for the government. The question remains perhaps whether an efficient car has the same subsidised fuel purchase limit to a fuel thirst car when the allocated quantity is too big. Another question my rise perhaps whether the limited amount of fossil fuel subsidy will only reduce the profit made by public transport which run by private individuals or will make them bankrupt.

I understand that there are different reasons for subsidising fossil fuels. Iran, Saudi Arabia and Russia provide subsidy due to the facts that they are rich in fossil fuels. While India, Venezuela, China, Indonesia, Egypt, UAE and Iraq give subsidy to fossil fuels not really due to their richness in fossil fuels, but more to try to support its fragile population and to control inflation. 

Chart showing breakdown of fossil fuel subsidies in selected developed countries

I hope that Government will stop tinkering the issue by limiting the quantity of fossil fuel subsidy. Lift up all the subsidy that recently enjoyed by rich people having big luxury cars. And if Government really cares for the poor, just transfer directly the amount of subsidy to their bank accounts – perhaps follow Indian way of disbursing subsidy. I actually have my own simple yet robust way of promoting transparency, equity, and accountability of providing subsidy as mandated by the constitution and I would be happy to share should the President wants it.

Government should realise that Indonesia is endowed with lots of renewable energy potentials: solar, hydro, wind, biomass, biogas, geothermal, and so forth and so on. And for example, by subsiding the fossil fuels and not the bio fuels, Government is not promoting the utilisation of those renewable energy potentials. Once the misleading subsidy on the brown energy subsidy is lifted, the green energy will have a much better chance to compete. I am sure that promoting renewables and energy efficiency will no longer an impossible mission for us.

It is interesting to learn that after the dual price between exactly the same 88 Premium to be sold for motorcycles and public cars vs to private cars, the government has quickly changed its mind. People already criticized that soon taxis will be difficult to get in Jakarta as they will all be busy selling subsidized petrol to private cars for some margins. Now, the Government already thought of creating a dual subsidy price but for different kind of fuels: petrol and diesel, with the latter has a slightly (IDR1000) lower price considering its usage in the private mass transportation, including trucks, buses, ships, ferries, fishing boats and so on. Well, there will be no shifting from cars to motorcycles, but from petrol cars to diesel cars.

Unfortunately, diesel which will be subsidized more is also used by manufacturing for their gen sets which probably is cheaper than buying electricity from PLN. PLN itself will be enjoying the diesel subsidy as many of their power generation is produced by diesel power plant, especially those produced by Indonesia Power, its subsidiary. Transport wise, diesel powered big luxury cars like Mitsubishi Pajero Sports, Toyota Land Cruiser Prado, Mercedes sedans like E350, jeeps GLK350 and vans like ML350, BMW like 328 sedan or X5 jeep, VW Passat or New Beetle TDI, Audi and others; are not ashamed for consuming subsidized diesel fuels.

The local government can take advantage of the condition by for example taxing the diesel cars heavier. Such policy will be punishing the more efficient consumers of fossil fuel, but the money collected by the local government should be used to reduce the adverse impacts of higher level of pollution from not well maintained diesel buses, trucks or even private cars.  With this extra money the government should be able to invest in car exhaust testing centres, and all cars, especially buses and trucks must be tested yearly to be able to get driven permit. Ideally all cars should be worth riding and they should be subjected to some comprehensive tests by garages approved by the Ministry of Transportation (MOT). Furthermore, all cars should also be insured against any loss and accidents.

Predicatively, the sales of Isuzu Panther, Kijang Innova Diesel, dan Chevy Spin Diesel will be much boosted. I am sure diesel engine car manufacturers like Daihatsu, Peugeot, Nissan, Mitsubishi, Mercedes, BMW, and most others will soon follow. Daihatsu will definitely sell its diesel variant of Terios, while introducing its world famous 4×4 off road wheel technology.   The government should be grateful as on average diesel engine consume fuel more efficiently. The more cars are using diesel technology, the better is the energy efficiency.

The government could regulate that all public transport including taxis and angkot minivan use only diesel, or alternatively give fiscal incentives to cars using diesel engines. One of them is the lower price of diesel fuel. To complicate matter, diesel engines requires regular maintenance to its injection system. Otherwise, the engines will give out thick smokes of wasted fuel. Hence, the annual MOT permit is a must for all diesel cars, especially those city buses and trucks.

If the government has guts enough to lift all the subsidy from diesel fuel, or even better to tax the diesel fuel for environment clean-up, there is no need to check their diesel engines at all. Profit motive will force them to maintain their engines efficiency. Well, this is of course out of the question because the government is afraid of high inflation. But, let’s take a deep breath for a sec; whose job is it to keep inflation low? It is Bank Indonesia’s and not the government. Bank Indonesia is independent and its employees are the highest paid ones in Indonesia and internationally to some levels. We can use monetary tool and mechanism to control inflation. We can use Bulog to keep the prices of sembako low.

To conclude, it is fine to increase the fuel price, but it is best to lift all the subsidy. Even rich advanced developed countries do not subsidize fuel. Therefore, quarterly the government could increase the price of fossil fuel until there is no subsidy at all. If the government has to, do subsidize the bio fuels. Use the CPO which has been refused all over the world, to replace fossil diesel fuel. It is better for the diesel engines and zero pollution (B100). Do not try to mix CPO with fossil diesel fuel, as it will only complicate matters.  At IDR7000/liter, B100 is actually cheaper and cleaner than the fossil diesel fuel.

Instead of limiting the number of liters of Premium 88 that someone can consume in a month, the Indonesian Government has decided to limit the person that can consume the so called subsidized petrol.

This user limitation is not coming out of the blue, but through a strong protest made by media, specifically TV who caught and interviewed rich people filling their luxury car’s tanks with subsidized petrol. Most of them claiming their right as they are tax payer, hence should enjoy what their money is used for. Should the tax officers be asked about whether or not they are tax payers, the question should lightly shift to whether or not they paid their tax accurately. Someone who ‘steals’ subsidy petrol for poor people, would also be easily ‘stealing’ people’s money  in reporting their taxes.

The Government was still in doubt whether they limit to only cars with engine of maximum 1300cc, or 1500cc, or up to 2000cc. The consideration was the fact that many of the older public transportation called Mikrolet are using Toyota Kijang with 1800cc engines. Their newer replacement, Daihatsu Grand Max are equipped with 1500cc engines. The smaller ones used by Angkot (Angkutan Perkotaan) are using Suzuki Carry 1000cc are perhaps the much bigger majority of all. While for the wealthier population, taxis are mostly using Toyota Limo/Vios which are powered by 1500cc engines.

On the other hand, the middle class population who do not have any alternatives of using public transport have to drive their small efficient cars. The most popular cars for this strata of society are Toyota Avanza which is also called as Mobil Sejuta Umat, and Daihatsu Xenia. While Avanza has two engine options 1300cc or 1500cc (Type S), Xenia has 1000cc and 1300cc. Xenia is relatively cheaper than Avanza, so that most people chose Xenia instead. In fact, those who bought Avanza, later on resort to Xenia for the cheaper spare parts. The decision to limit up to 1300cc really shows depth in the knowledge and sensitivity of our policy makers.

The question is raised of whether such policy has accommodated those who cannot afford new cars and instead buy second hand cars. The older the car is usually the cheaper is the price, and the more inefficient is the fuel consumption. Older cars do not necessarily co-related to big engines. Daihatsu Ceria, for example, is equipped with 800cc engines. Their prices are affordable, mostly being below Rp50Million.

A more serious question is raised of whether the Government will stop its effort only up to this limitation. Would there be quantity limitation? I guess, the answer will be yes, when the discussed policy is not sufficient. What about the diesel price? Why can’t the Government impose similar policy? The answer, I guess, is it should. Even though, we do not need to import diesel fuel, its consumption should be limited, as it contains some subsidies as well.

More than three years after the enactment of Act Number 4/2009 on Mineral and Coal, the implementation of the act was finally regulated on 6 February 2012. The Minister of Energy and Mineral Resources’ regulation Number 7/2012 caused an absurd shock to companies holding IUP mining license (Ijin Usaha Pertambangan).

Most of these rich companies are not ready to process the mineral ores within 3 months after such regulation was issued (literally since 6 May 2012 on). They complained that it is impossible to build a smelter within three months after such regulation was in place.

Actually the regulation does not ask these companies to build their own smelters within three months, it only says that all holders of production-operation-stage IUP and IPR (Izin Pertambangan Rakyat) which were issued before yang the issuance of this decree are banned from selling mineral ores (in raw soil state) abroad.

This new regulation is actually aimed at forcing all the companies to submit their production proposal and plan of increasing added value within three months after the regulation was in power. Without them by 6th of May 2012, the government will embargo their activities. So, nobody is asking them to build the smelting facilities in the period of three months. This means they can still sell their mineral ores domestically, to existing smelters near-by, for example Krakatau Steel.

By building their own smelters, in the near future, these companies will definitely get more profits, part of profit which previously was enjoyed by international smelting companies. By doing so, the local people will get more benefits as the smelting facilities will definitely open up new job opportunities, hence reducing the level of unemployment. In aggregate, the national GDP will increase expressing the increase of welfare for the Indonesian people.

This regulation should be supported by all of us and could be the investment for the long future when our great grand children will no longer be able to enjoy the natural richness of various minerals endowed by the Lord above. Take Malaysia for example: even though they no longer have tin ores to produce, they manage to have a sustainable mining activity by importing tin ores from South American countries and process them using their smelters to produce and export high quality tin industrial products. Or another neighbor of ours, Singapore, who do not have crude oil, but have the facilities to refine them so that they can get income by selling their oil refinery services.

To the industry associations, I would humbly ask them to think twice before asking for a judicial review against this ministerial decree. They can actually get together in a consortium building a smelter and start enjoying the extra benefits among themselves. This regulation is actually a win-win solution to the local people and the mining companies. It is high time for the local people to also enjoy the benefits of mineral industry and also high time for you to enjoy the additional profits from the additional values of processing the ores into industrial products. Please keep in mind that the government still has the right to announce a moratorium of all mining activities should their impacts exceed their benefits for all.

LCGC is abbreviated from Low Cost Green Car. Even though the program name is self explanatory, it technically defines the vehicle segment to be 4×2 (2 wheel drive), equipped with 660 – 1,200 cc engine, carries 4 passengers, emitting Euro 2 and 3.
Honda Brio
The LCGC program offers some tax reliefs or discounts including:

  • luxury sales tax : MPV from 10% to 0% (exempted); saloon from 30% to 15%;
  • import duty of components & raw materials not yet produced domestically will be exempted for 8 years including production machinery and equipment.

Toyota Etios
From Japanese manufacturers; Daihatsu, Suzuki, Toyota and Nissan will sign the LCGC deal very soon. From Indian and Chinese manufacturers the list will soon add up.

IMHO this is still a trial and error policy, at least it is not an integrated policy with the national car program or with the national energy management in mind. A proper regulation should be a bit more detail, a bit fairer and offering a bit of benefits for those who want to contribute to the  protection of the environment.
Suzuki Cervo
Therefore the car related tax rate should be used to control the preference of the industrialists. Differentiating size of engines (up to 500cc, 500-1000cc, 1000-1500cc, etc.), types of vehicles (MPV, city car, saloon, SUV, truck/bus, and other); types of fuel (petrol, natural gas, natural diesel, bio diesel, electricity, hybrid between petrol and electricity, hybrid between natural gas and petrol, and so on) would be a good start. Making sure that the rates are set progressively towards whatever car with the highest social costs, would be a way to control the manufacturers into producing whatever we think is the ideal car for Indonesia.
Chevy PM7
Manufacturers are ready, Honda with Brio, Toyota with Etios & Liva, Hyundai HA800, Suzuki Cervo, Daihatsu Mira-eS, Chevrolet PM7, and Tata Nano, and the  list is not exhaustive. All of the world car manufacturers are now seeing Indonesia as the biggest market in SE Asia. Many of the Japanese car manufacturers regretted their decisions to base their production in Thailand, now that they are suffering a lot due to the flooding.
Daihatsu Mira
Indonesia therefore has a high bargaining position in deciding what type of cars would fit our country best. Daihatsu is ready to invest USD400 million, Suzuki to pour USD800 million, Toyota USD470 million and Nissan USD200 million. So, don’t hesitate to decide that we want a reliable family car (7 seater), run by a hybrid engine between electricity (battery) and bio (palm) diesel, with fuel consumption of at least 1:50.

The world oil price is steadily increasing with a little hiccups here and there in connection with the oil politics played by the US and Arab’s countries. As a negative oil producing countries, meaning, it is importing consumable oil products more than it is exporting crude oil; Indonesia suffers from the high oil price. In practice, the monopolistic one and only oil company, Pertamina, could not give away their profits in the form of public subsidy. Pertamina concerns is only to make a lot of profits, pay its dividend, pay bonuses to all members of boards: directors and commissaries, to ensure that the company is running as smoothly as possible. Therefore, the petrol price subsidy shall be burdened by the government.

To begin with I should underline the inefficiency of subsidy. In the standard supply and demand curve diagrams, a subsidy will shift either the demand curve up or the supply curve down. A subsidy that increases the production will tend to result in a lower price, while a subsidy that increases demand will tend to result in an increase in price. Both cases result in a new economic equilibrium. Therefore it is essential to consider elasticity when estimating the total costs of a planned subsidy: it equals the subsidy per unit (difference between market price and subsidized price) times the new equilibrium quantity. One category of goods suffers less from this effect: Public goods are—once created—in ample supply and the total costs of subsidies remain constant regardless of the number of consumers; depending on the form of the subsidy, however, the number of producers on demanding their share of benefits may still rise and drive costs up.

The recipient of the subsidy may need to be distinguished from the beneficiary of the subsidy, and this analysis will depend on elasticity of supply and demand as well as other factors. The net effect and identification of winners and losers is rarely straightforward, but subsidies generally result in a transfer of wealth from one group to another (or transfer between sub-groups).


In regards to the petrol subsidy in Indonesia, there are more and more opinions on lifting the subsidy due to the increasing amount of demand triggered by the fact (1) the oil supply is monopolistic by Pertamina, the state oil company, so that it is inelastic towards the low price (2) there is no strict control over the quota, because Pertamina can always ask the Finance Minister to pay for the price difference. Therefore, the possible options are (1) to give competing oil companies the right to freely sell Premium – the subsidized petrol (2) to limit the quota of Premium which can be used by a car; (3) to convert the use of Premium into its cheaper substitutes, e.g. LNG, LPG, electricity, bio-diesel; (4)  to ban private cars from using Premium; (5) to cross subsidize Premium with vehicle taxes.


There are oil companies selling petrol apart from Pertamina. They are Shell, Petronas, and Total, who can actually sell the higher quality petrol (Pertamina names it Pertamax) cheaper at least IDR2,000 per litre (as per 11/05/11). Many believe that this higher price of Pertamina is due to its inefficiency by only importing Pertamax, instead of self-producing the fuel, but I don’t think so. Under President Director Karen, Pertamina  has been reorganised to be very efficient – you can ask any of its employees about his/her now much reduced fringe benefits. The only reason for the higher price is the bigger bills, Pertamina can charge to the Finance Minister in the name of fuel subsidy. The president director Karen Agustiawan is an alumni from Mobil Oil and Haliburton, two of the most efficient oil companies operating in Indonesia. You can clarify this statement by examining how small, these companies pays their corporate taxes, but not by how unbelievably big these companies claim their cost recovery. Therefore, in order to stop president director Karen from doing her old bad habits of abusing the Indonesian government’s lousy system, we shall grant its competing oil companies the equal right to freely sell Premium – the subsidized petrol. I’m quite sure that all this mambo-jambo about subsidized petrol is rooted in the monopoly nature of Pertamina, combined with the lack of integrity of its president director.


Theoretically, limiting or reducing the supply of goods in the market, ceteris paribus, will always push the price to increase. As the shadow price is higher, the shadow market will emerge. Efforts of smuggling Premium to a shadow market abroad will definitely be multiplied. And the shadow market  has already been existed. For example, on 27/08/11, Indonesian Navy patrol boats cornered and detained a North Korean-flagged ship off the Riau Islands. The vessel, the Mount Tioman, with an Indonesian crew, was carrying more than 18,000 barrels of oil and sailing toward China when it was caught offloading some oil to several smaller vessels. Officials arrested the crews of the boats and confiscated the oil. On 30/08/11, police also stopped several military trucks carrying gasoline to East Timor by land. In recent weeks seven employees of state oil company Pertamina have been detained for questioning in connection with smuggling. No charges have been filed.
On 15/10/11 police from Bintan Timur confiscated 1 ton of subsidized diesel, in Kijang, Bintan, belonging to Sarifudin (aka Edi), 41, a taxi driver, in his fuel kiosk in Kampung Tanah Kuning, Kijang Kota. He admitted reselling the diesel to local fishermen charging IDR500 extra per litre.
Hence, limiting the supply of subsidized fuel  is a very hard thing to do, if not impossible at all.


This option in theory, is an idyllic and long-term one, because not only these fuel alternatives are cheaper, but they are also environmental friendly. Unfortunately, the conversion kit from petrol to gas will cost the car owner IDR30million. Government initially expected Pertamina to buy the conversion kits and do the conversion to as many cars as possible on a voluntary basis. But Ms Karen Agustiawan obviously has never joined a scout or any other voluntary organization before, as Pertamina finally refused to be in charge of the non-profit fuel conversion program.
In my humble opinion, this option needs to be supported not only by Government, but also by the industrialists. Instead of converting, they can simply produce and sell cars with hybrid fuel combustion system, be it petrol and gas, petrol and electricity, diesel and gas, diesel and electricity, and so on and so forth. How would the car manufacturers join this program when they can sell cars as easy as selling peanuts. Of course, the Government needs to give incentives to the car industry. Thai government already introduced this fiscal incentives package in 2009. Why can’t Indonesian government do something about it? Nonetheless, be careful, because Indonesia actually do not have much gas left. Due to stupidity, and maybe greed, someone signed a long term contract to sell natural gas cheaply to China. Therefore the solutions left are only electricity and palm oil biodiesel. Many of these palm oil plantations are now owned by Malaysian corporations. So, Indonesia therefore have limited options of either build expensive electricity generating dams all over the country, or build cheaper but high risk nuclear power plan.


First of all, there are many small and medium size industry who do not have the resources to apply for public transport ‘yellow’ plate number. Secondly, how many cars out there that have ‘red’ government plate number. Try to multiply the number of Pemda, Pemkot, and Pemprov with the number of fleet they have. Also add the number of ‘green’ or ‘blue’ or ‘red’ military plate number. This option, therefore is not effective at all. Fourthly, the owner of those private ‘black’ plate number cars are tax payers. With the corruption are still rampant in most tax offices, many people on Facebook already gave ultimatum of not wanting to pay their taxes. This option will definitely make them really pissed off, hence their executing their ultimatum is just  a matter of time. Finally, the tension among the poor population against the the MPs, government officials, police,  satpol and so on is a bit high due the many recent cases where they do not show any sympathy for the poor people. Many experts believe that if the burden of disallowing drivers of private cars from buying subsidized petrol, poor people and  middle class people with turn to violence and anarchy. The easiest target would be the gas stations that are vulnerable to catch fire.


The fact that there are many big cars, like Toyota Land Cruiser, Pajero sports, Volvo, Mercs, BMW, Toyota Camry, Honda Accord, Infinity, Audi, VW, Ford, any brand you name it, the manufacturer must have a line of their big engine fitted cars for some reasons. In the name of speed and power, they put big engine that always thirsty for petrol into their expensive cars. In my humble observation, most of the owners of these luxury cars always buy Premium – the subsidized fuel. They are rich people, but they are smart. Understanding that their cars drink a lot of fuel, they do not want to buy the more expensive petrol, like Pertamax.

On the other hand, many poor to middle class car owners can only afford cheap small cars with their small fuel-efficient engines. Even these cars have only small capacity fuel tanks. These people only use very limited amount of subsidized petrol and when they have to buy the double more expensive petrol, they are the one that will be hit very hard. The difference petrol price could mean a tuition for their children schools. While for the rich people who are currently abusing the subsidy, the difference could only mean a change from having dinner in a very prestigious restaurant into a smaller but still luxury restaurant.

Since, there is a progressive rate of car tax rates depending on the size of the engine, why not ask local governments to help pay the subsidy. They can always increase the taxes they annually charge to luxury car owners without hurting the owner of small cars.


From all the options available, in my opinion the most pragmatic one is the cross subsidy with vehicle taxes. The local government’s SAMSAT office have the capacity to do further investigation as they have the actual number of cars with their engine size. It is time for the government to show that they really care for the poor and middle class people.

Jatropha curcas, Barbados nut or Physic nut is just a plain old castor oil which was used long before the kerosene or any other form of petroleum product was known to Indonesians. However it is being touted as an alternative source of fuel as it is renewable and relatively cheap for tropical countries like Indonesia.

The head of the Bandung Institute of Technology’s Biotechnology Research Center said everybody knows we will run out of fossil fuels in the next 50 or 100 years which is a short period of life for the earth. Therefore we should start using alternative fuels now. He said among other alternative energy available in the country such as coal and nuclear power, jatropha was the best option as it offered not only renewable sources but also ensured the rehabilitation of over 59 million hectares of critical land across the country.

Jatropha could be planted in critical or abandoned land and it needs only sustainable sunlight and water to keep it alive. Such a condition surely makes it the best environmentally friendly fuel alternative. Experts believe increasing the consumption of biofuel would reduce greenhouse gas emissions mainly produced by fossil fuels which have worsened global warming increasing temperatures and raising sea levels.

Jatropha plantation projects would also create jobs for some 11 million unemployed people in the country and raise the livelihoods of the more than 60 million poor people living on less than US$2 per day and unlike oil, gas or coal businesses, jatropha plantations could be owned by anyone and not only by the government or companies

To help promote the use of castor oil the ITB in collaboration with National Geographic Indonesia and a local authorized Mitsubishi dealer PT Krama Yudha Tiga Berlian Motors plans to hold the 2006 Jatropha expedition.

The expedition will test-drive a Mitsubishi Strada car fueled with 100 percent castor oil. The sport utility vehicle will travel from Atambua in East Nusa Tenggara to Jakarta from July 12 to July 20. President Susilo Bambang Yudhoyono is scheduled to greet the car upon its arrival in the capital.Jatropha

Unfortunately, a mass production of this green fuel will have exactly the same impacts as that of other alternative fuel: Palm oil which has been recently criticised by environmental activists like Green Peace and Friend of Earth for deforestation of tropical rain forests. Therefore, Indonesia which is considered as one of the lungs of the world, should never think of using this fuel by sacrificing the rainforests.

Well, Indonesia actually still has a lot of mineral fuel underneath its thousands of islands, but I think it is better to leave the secret lockup or else other nations would like to come and rob it by force if necessary, just like the Iraq case.

Hold on, a team of researchers at Yogyakarta’s Muhammadiyah University (UMY) has just patented their invention Banyugeni, which literally means “firewater”. Rector Khoiruddin Bashori said by mass producing Banyugeni, Indonesia would be able to allocate its annual fuel subsidy of Rp 50 trillion (US$5.50 billion) to pay off foreign debts.

Khoiruddin said the invention was the result of about a year of research, involving five researchers at the university’s Center for Regional Energy Development Studies: Drs Purwanto, Ir Bledug Kusuma Prasadja MT, Ir Tony K Haryadi MT, Ir Lilik Utari MS, dan Dra Nike Triwahyuningsih MP., tasked with researching and developing alternatives to fossil fuels. Banyugeni, according to Khoiruddin, currently has four different product variants — hydro-kerosene, hydro-diesel, hydro-premium and hydro-avtur. He said these were equivalent to their fossil-fuel counterparts kerosene, diesel, gasoline and airplane fuel. “In the future, we will also develop other product variants that are superior to existing variants,” Khoiruddin said. The newly invented fuel had been tested by PT CoreLab Indonesia, an independent international laboratory, and had been subsequently declared to meet the standards of the Directorate General of Oil and Gas at the Energy and Mineral Resources Ministry. The test result, Khoiruddin said, was convincing. Hydro-premium, for example, proved to be non-corrosive, non-residual and to show low-emission rates. Hydro-avtur is similarly non-corrosive, low in emission rates and has a low freezing temperature of minus 45 degrees Celcius. “The test on aero-modeling crafts shows that hydro-fuel can be categorized as jet fuel,” said Purwanto, adding that this particular variant ran cool with an initial boiling point of 164 degrees Celcius. Similar results were shown from tests on hydro-diesel and hydro-kerosene variants, Khoiruddin continued. An experiment at the Surakarta aviation education and training institute Tutuko using an ultra-light Jora aircraft with a Rotax 582 engine on Feb. 11, 2008, according to Khoiruddin, confirmed Banyugeni’s variant of hydro-avtur could satisfactorily start the craft’s engine and achieve maximum take-off power.

Hydro-fuel was produced using so-called “mechano-thermal-electro-chemical” technology involving four processes: mechanical, thermal, electrical and chemical, all using water as the raw material.“Water is basically flame. It comprises explosive hydrogen and flammable oxygen,” said Purwanto. The process of turning the water into hydro-fuel, he said, was basically keeping the two atoms in the water in such a position where the water could revert to its constituent elements, hydrogen and oxygen.“The results are fuel products that are not polluting and are environmentally friendly,” said Purwanto, adding that the products’ elements and characteristics had made it possible for them to be directly applied on machines without any modification to the machines’ components.Hydro-kerosene, for example, can be directly used in kerosene stoves or lamps. Hydro-diesel, similarly, can be directly used to start a diesel engine while the hydro-premium can be used to run motorcycles or cars. The hydro-avtur, according to Purwanto, has also been tested on jet-fuel machines such as the ones propelling aero-modeling aircraft.

Researcher Nike Triwahyuningsih said for further processing of hydro-fuel, the water needed to be purified. Once processed, Nike said, a liter of pure water could produce about the same volume either of hydro-premium, hydro-kerosene or hydro-diesel, according to the desired results.“We used seawater for the research, but basically any water including liquid waste can be processed into hydro-fuel,” said Nike. Nike said the decision to use seawater was mainly made with a consideration that ground water was for human consumption. Thus, mass production of hydro-fuels would not disturb clean water supplies for humans, she said.“That way we create a good synergy between the people and the government for the prosperity of all, and not just for particular groups or parties,”

Presiden SBY memperhatikan BBM blue energy di kediaman pribadi Puri Cikeas Indah, Bogor, Minggu (25/11) sore

At about the same time, claiming to have the idea from the Qur’an, Joko Suprapto, a villager of Ngadiboyo, Rejoso, Nganjuk, East Java, invented Blue Energy – which was exhibited at the United Nation Framework Conference on Climate Change (UNFCCC) 2007 in Nusa Dua, Bali. Just like Banyugeni, Blue Energy uses seawater as its raw material and 100% compatible with conventional petrol engine. Moreover a diesel variant of Blue Energy significantly reduce the vibration of tested diesel engine. Blue Energy is created by splitting the water molecules into H+ and O2-. Some catalysts and processing are needed to turn seawater into a specific carbon chained fuel. To prove the reliability of Blue Energy and to show the alternative fuel to the UNFCCC attendants, two double cabin Ford Ranger trucks, one Mazda 6 saloon car, one bus, and one Blue Energy tanker truck, were driven from Cikeas, Bogor, West Java to Nusa Dua, Bali.

There are some reservations from experts with regards to Banyugeni or Blue Energy mass production and costs. In my opinion, the energy required for the production can be sourced directly from the sea, utilising the OTEC (Ocean Thermal Energy Conversion) technique. Of course, the government, Ocean Thermal Energy Conversionvia PT PLN must build its rather expensive infra structure while charging the hydro fuel producing company e.g. PERTAMINA for the energy used. Technology wise, OTEC was invented in 1880s by a French physicist, Jacques Arsene d’Arsonval. As early as 1930, Cuba built OTEC plant with a low-pressure turbine generating 22kW of electricity. The work was led by Georges Claude who was d’Arsonval’s student. In 1974, The United States became involved in OTEC research, when the Natural Energy Laboratory of Hawaii Authority was established at Keahole Point on the Kona coast of Hawaii. The laboratory has become one of the world’s leading test facilities for OTEC technology. Japan also continues to fund research and development in OTEC technology. India piloted a 1 MW floating OTEC plant near Tamil Nadu. Its government continues to sponsor various research in developing floating OTEC facilities.

Investing in OTEC and hydro fuel, the government will definitely reap the benefits of (1) cheaper fuel price which can pull down inflation (2) increase export of oil products as we no longer need them domestically (3) diversifications of PLN (now selling OTEC electricity) and PERTAMINA (now selling hydro fuel) will significantly reduce their business risks and guarantee profitability. With a very prospective project proposal like this one, ADB or even IBRD will definitely offer funding, if not grants. Come on Mas Langgeng, use PIP to start this energy revolution!

Despite the achievement of Indian motor industry Tata in creating a small economical and affordable (only USD2500 new) car of its Nano, the world currently still needs a more petrol efficient car.

Tata Nano

Decades ago, in reaction toward 1956 Suez oil crisis, the world had witnessed such engineering achievement of many motorcar industries which have already answered the challenge of increasing oil price, now reaching more than USD100 per barrel.

BMW for example introduced Isetta 300 following the Iso Rivolta’s success.
Messerschmitt introduced KR175 earlier in 1954 which subsequently replaced by a bigger engine KR200 in 1955.Its original specification (in German) is still available here.

Iso Rivolta Isetta

The picture below shows the roadster version with the glass hardtop removed enhancing its aerodynamics.

These pictures are just a taster, you can have a long but not exhausted list of microcars at Wikipedia. In brief the smallest petrol engine ever used was 38cc (Fend Flitzer) and the biggest one was 700cc (Reliant Bond Bug).
My ideas of the future world involve smaller cars or microcars apart from smart buses and lorries which auto-off their engines after a couple of seconds(I will write about this at a later time).Fend Fitzer
The main characteristics of these microcars are their small engines mostly modified from motorcycle engine (exclude the electric motor please) and air cooled, with small wheels like those of scooters. Such characteristics were not able to be kept out in Tata Nano using a twin-cylinder, 623cc petrol engine powering it drives the rear wheels. The Tata Nano weighs around 600kg.
Developing 32bhp at 5500rpm, its parallel twin petrol engine delivers only modest performance – Tata claims 0-44mph in 14secs and between 66- and 70mph flat out.


And with high-profile 12in wheels as standard, and unas

sisted drum brakes at each corner, braking performance should be similarly modest.

Without modern cars comforts such as air conditioning, power steering and electric window at the moment Tata Nano gives 57mpg. Compared to Toyota Prius or Honda Civic Hybrid giving 60-70mpg, Tata Nano fuel efficiency can still be improved.
Forget about Acabion (below left) which looks too motorcycle giving 342mpg at efficient slow mode or 100mpg at 100mph high-speed mode,

Messerschmidt Kabinenroller KR 200

the world needs a car more than a motorcycle. I don’t think the answer to the prayer would be Aptera (below right) by Accelerated Composites, San Diego, which prototype gives 330mpg with acceleration and handling similar to Honda Insight as it sells just under USD20,000, almost 8 times of Tata Nano.


In order to achieve the balance between the price, the mpg and the usability (transporting 4 people, rather than just one or two), we have to considers all influencing factors. Factors of price include R&D cost, production scale and materials used.

Factors of mpg include mass, aerodynamics, and engine used. Factors of usability include space size, access doors, and boot/compartments.

To cut the R&D cost, my suggestion is to use existing designed like EV1 from GM (see


picture below) or Honda Insight (further below), yet we need to ensure that they are four seats models.

EV1 offers drag coefficient of just 0.195, while Insight Cd=0.25. These are acceptable to my laymen understanding.

The materials should be composite with aluminium frame to minimise its weight. The engine size and type should match the final gross weight including 4 adult medium weight passengers. If possible, use an existing engine either 2 (from big motorcycles) or 3 (from small cars) cylinders petrol, water cooled and lightweight (e.g. ceramic or

Honda Insight

intermetallic-alloys one).

Having said that, I would not neglect the need for one person car like those bubble cars for commuting to work.

These bubble cars would help cut the traffic jams and the pollution. But what sort of bubble-cars would be acceptable for today’s need.

In my opinion if becak (see below) can be enhanced, we can have a motorised tricycle which will look like the Isetta, but allow 3 people instead of only 1 person.


To enhance its efficiency, the size of the wheel needs to be reduced. The front opening needs a proper tempered glass door and the body needs to be made by resin, instead of heavy wood. Hmm maybe it won’t look like becak anymore.

Last but not least, we need to promote the green diesel. Not only for its less pollution, but also for the state’s balance of payment. We have been importing loads of fossil fuel products, much more than our crude oil export. Forget about habitat, ecosystem etc.; a palm tree is as good as other tree in absorbing carbon dioxide at daylight. Alternatively, we can use methanol for petrol engine. With current development of lithium ion battery, electric engine is equally good alternative to the green diesel. To mention one, ZAP (Zero


Air Pollution) 3 wheeler cars have been mass produced by a public company based in Santa Rosa, California, since May 2006.

The top speed of the Xebra is 40 mph (65 km/h), with a range of about twenty five miles with the standard batteries, or forty miles (64 km) with the optional extended range batteries. The sedan version can carry up to 4 people. The listed cargo weight for both the SD sedan and the PK pickup is 500 lb (230 kg), although PK owners have carried more weight than that. The SD sedan lists for US$10,500, and the PK pickup truck model with dump bed for US$11,900 in December 2006.

ZAP SDOf course, the government needs to influence the population for example by exempting the bubble cars, especially the electric ones from road tax or even 3-in-1 zone.

Well, see you in your cool bubble car!