The Impact Assessment of Coal Gasification Initiative to Indonesian National and Regional Economy

This study aims to assess the impact of the Coal-Gasification Initiative to Indonesian national and also regional economy. As part of national energy policy, the Initiative can help meet the high demands for Indonesian gas energy. The study adopts Input-Output (I-O) simulation model to analyze Indonesian National Input Output (I-O) database and Interregional Input Output (IRIO) database of 34 provinces. The simulations show that the Initiatiave will bring significantly positive implications in national and provincial levels, starting from construction project, production set up, up to initial production stages. More specifically, it results the increase in economic output, growth, labor compensation, business surplus, and tax revenues in those levels. The province where the pioneering gasification industry is located and the seven neighboring provinces which are part of the urea fertilizer, polypropylene, and dimethyl ether production network can benefit much more significant impact than the other 26 provinces out of the network. The successful initiative can relieve the growth burden out of Java Island and promote equitable and sustainable development. In terms of financing hurdle, with proper fiscal incentives, it can attract domestic and international financing.