Indonesia's Ministry of Environment and Forestry emphasizes that manufacturers in the country's automotive industry do not need to be concerned about the implementation of European emission standards, the standards that define the acceptable limits for exhaust emissions of new vehicles.
Through Environment and Forestry Ministry Regulation No. P. 20/MENLHK/SETJEN/KUM. 1/3/2017 on the Standard Exhaust Emission of Euro 4-Type Motor Vehicles, published on 10 March 2017, the Indonesian government orders all domestic manufacturers of four-wheeled motorized vehicles to adjust to the Euro-4 emission standard.
The Indonesian government provides an 18-month period to these car or bus manufacturers to adjust to the new standard, while diesel vehicles were given four years to adjust. Currently, most automotive manufacturers in Indonesia are still in the Euro-2 phase and therefore face difficulty to export cars abroad where the standard is much higher.
Dasrul Chaniago, Air Pollution Control Director at the Environment and Forestry Ministry, said the government will actually not require to impose sanctions on those automotive manufacturers who fail to comply with the new rule before the deadline because they would actually shoot themselves in their own feet. Without upgrading the standard, local manufacturing companies will have an increasingly limited market, both domestically and abroad.
Meanwhile, stakeholders in Indonesia's automotive industry are concerned about insufficient stocks of fuel for cars that are built conform the Euro-4 standard. Although the Indonesian government said it will - at first - import enough fuel, stakeholders are concerned that the government will fail to safeguard enough supplies. When lower standard fuels are used, then Euro-4 standard engines can easily become damaged.
Indonesia's state-owned energy company Pertamina has two oil refineries (located in Cilacap in Central Java and Balongan in West Java) that can supply around 60 percent of required Euro-4 standard fuel on the island of Java. The remainder will need to be imported from abroad, while private oil and gas companies are also invited to invest in higher grade fuel refineries.