LPEI-PLN Joint Research Map out Regional Electricity Needs to Increase Exports

The State Electricity Company (PLN) (Persero) conducted joint research with the Indonesian Export Financing Agency (LPEI)/ Indonesia Eximbank regarding the Impact of Electricity Consumption on Export Value and Mapping of Sectoral Priority Areas. This joint study is a follow-up to the signing of the cooperation that has been carried out by both parties on August 25, 2021 in Jakarta.

The purpose of this joint research is to map and calculate the electrical capacity needs of areas that produce export-oriented products, especially products from value-added sectors such as food & beverage, wood & furniture, pulp & paper, textiles & textile products, automotive, tools and equipment. mechanical & electrical, and footwear.

Based on research on 827 samples of companies (data on electricity consumption and exports from exporting companies in Indonesia) in the period February 2019 to September 2021, the results show that there is a significant and positive relationship between electricity consumption and the value of Indonesia's exports from the seven value-added sectors.

The Head of the Indonesia Eximbank Institute (IEB Institute) Division of LPEI Rini Satriani explained that the results of the regression analysis showed that electricity consumption and sectoral export values had a two-way relationship that was significant and influenced each other.

“Increasing electricity consumption as one of the production inputs can directly increase the value of exports. On the other hand, when there is an increase in global demand, the value of exports will increase, thereby increasing the demand for electricity consumption," Rini said in a written statement, Thursday (23/6/2022).

Furthermore, Rini said, electricity consumption has an impact in the form of a positive elasticity value on increasing the value of Indonesia's exports at the sectoral and regional level. Some regions in Indonesia even have elasticity values above one (>1) to the value of sectoral exports, which means that any additional electricity consumption can encourage an increase in the export value of a region/sector.

For example, Banten Province has a positive elasticity value of 1.13% to the export value of the food and beverage sector (mamin sector) from the region. This means, if there is an additional 1% of electricity in the food and beverage sector, the export value of the food and beverage sector will increase by 1.13%.

Thus, the results of the elasticity measurement can reflect the importance of the role of electricity as one of the production inputs of export-oriented industries in increasing the value of Indonesia's sectoral exports, especially in sectors that have added value.

's Executive Vice President of Corporate Finance, Teguh Widhi Harsono, said that the results of this research prove that a reliable electricity supply is able to support national economic activities, especially export activities. "PLN continues to be committed to providing sustainable and affordable electricity services for industry players, especially export-oriented," he said.

He said PLN and LPEI would continue to collaborate and synergize in joint research to encourage Indonesian exports and support Indonesian products to be able to compete in the global market and strengthen the national economic base.