IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Oct 2015 | Removal date: open ended
Still in force

Production subsidy

On 30 September 2015, the Indonesian state-oil-company. Pertamina announced it would cut its jet fuel prices by 5.23% at the Soekarno-Hatta International Airport in Jakarta. The airport accounts for 40% of the jet fuel demand in the country.
Pertamina admitted that global jet fuel prices have recently risen by 1.31% in USD terms, but it claimed it was able to lower them domestically by efficiency gains including using larger vessels and optimizing the inventory stock.
According to media reports (cf. Sources), however, the move was aimed to "provide further relief to airlines amid a weakening rupiah and the resulting increase in costs".
The news article also mentions that "Pertamina had sold avtur 'the jet fuel brand' at 10 percent to 15 percent higher than the price in Singapore, which spurred international airlines to opt for the city state instead of Indonesia for refueling." Arguably this measure alters the incentive to refuel and so affects major airports in South East Asia.

The price cut comes shortly after the government announced it would abolish the value-added tax on imported aircrafts to support its local transport industry (cf. Related Measures).
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
 

AFFECTED COUNTRIES

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