Minister of Finance Purbaya Yudhi Sadewa has introduced new regulations to streamline the excise duty exemption process for ethanol, a strategic move designed to accelerate Indonesia’s energy transition. This regulatory update comes in direct response to requests from PT Pertamina Patra Niaga, which had previously highlighted the need for simplified requirements to advance the country’s bioethanol initiatives.
The new policy is formalized in Minister of Finance Regulation (PMK) Number 34 of 2026, enacted on May 25, 2026. This regulation serves as a revision to the existing PMK Number 82 of 2024, which governs the procedures for excise duty exemptions.
As stated in the considerations of the new regulation, the move is intended to support national energy security programs and promote the use of clean energy. By facilitating the blending of taxable ethyl alcohol with petroleum refinery products, the government aims to create a more efficient pathway for sustainable fuel production.
The core of this amendment involves adding a new provision to Article 8 of the previous regulation. Through this change, Minister Purbaya has expanded the scope of industrial activities eligible for exemptions. Specifically, industrial processes involving the blending of refinery outputs with ethyl alcohol are now officially classified as manufacturing or processing activities. This reclassification allows companies to meet the necessary administrative criteria to qualify for excise exemptions more easily.
While ethanol remains heavily regulated due to its status as a taxable commodity—similar to alcoholic beverages—the government has opted for a more flexible approach for the fuel industry, recognizing its critical role in the bioethanol supply chain. This regulatory pivot addresses concerns raised during the investment bottlenecking session held in February. During the forum, PT Pertamina Patra Niaga pointed to complex licensing hurdles, specifically citing the challenges in securing Industrial Business Licenses (IUI).
Oki Muraza, Deputy President Director of PT Pertamina, previously noted that the permitting process—which includes complex Environmental Impact Analysis (Amdal) requirements—could take up to three years per site. He emphasized that these bureaucratic hurdles were significant obstacles to scaling up bioethanol production. The government’s move to simplify these requirements is expected to mitigate the need for the redundant, site-by-site licensing that currently complicates operations.
To further standardize the industry, the government is adopting a new Indonesia Standard Industrial Classification (KBLI) number 19206. This classification specifically covers the blending of petroleum refinery products with biofuels like ethanol under the broader manufacturing sector. By aligning these regulatory frameworks, the government aims to reduce administrative friction, ultimately fostering a more conducive environment for clean energy investment in Indonesia.
Summary
Minister of Finance Purbaya Yudhi Sadewa has issued Regulation (PMK) Number 34 of 2026 to streamline the excise duty exemption process for ethanol. This policy revision, which updates PMK Number 82 of 2024, aims to accelerate Indonesia’s transition to clean energy by supporting national bioethanol initiatives. The amendment specifically addresses the concerns of PT Pertamina Patra Niaga regarding complex licensing and administrative hurdles.
The regulation expands the scope of eligible industrial activities by reclassifying the blending of refinery outputs with ethyl alcohol as a recognized manufacturing process. Furthermore, the government has adopted a new Indonesia Standard Industrial Classification (KBLI) number 19206 to standardize the industry. These changes are expected to reduce bureaucratic friction and facilitate more efficient investment in the country’s sustainable fuel supply chain.