By: Feiral Rizky Batubara, Board Advisor, Indonesia Renewable Energy Society (METI), Chairman of the Board of Trustees, Indonesia Wind Energy Association (AEAI)
For much of the twentieth century, national energy strategies revolved around a relatively straightforward objective: securing enough energy to sustain economic growth. Success was measured by oil reserves, gas production, electricity generation, refinery capacity, and the ability to shield supply chains from external shocks. Those priorities remain relevant today, but they no longer capture the strategic role energy plays in an increasingly complex global economy.
Energy has evolved far beyond its traditional role as a traded commodity. It has become a source of industrial competitiveness, technological leadership, investment attraction, and geopolitical influence. The global conversation is therefore moving beyond conventional notions of energy security, and even beyond the energy transition itself. The defining challenge of the coming decades will be how countries convert their energy assets into long-term economic competitiveness.
Nowhere is this transformation more visible than in the Indo-Pacific. Home to the world’s fastest-growing economies, expanding manufacturing capacity, and rapidly rising electricity demand, the region has become the focal point of global competition for critical minerals, battery manufacturing, electric vehicles, hydrogen, biofuels, liquefied natural gas, and renewable energy technologies.
This competition is no longer centred solely on extracting resources. It is increasingly about building integrated industrial ecosystems that combine natural resources with advanced manufacturing, engineering, logistics, finance, innovation, and highly skilled human capital. In other words, energy is no longer merely another economic sector; it has become the platform upon which future economic strength will be built.
Countries that recognise this shift are redesigning their industrial strategies accordingly. They understand that prosperity in the twenty-first century will depend less on owning resources than on creating value across the entire energy value chain. Recent policy developments illustrate this changing paradigm.
The United States has placed clean-energy manufacturing at the heart of its industrial strategy to strengthen domestic production while reducing dependence on overseas supply chains. The European Union increasingly approaches decarbonisation
through the lens of economic security, investing heavily in strategic technologies and diversifying access to critical raw materials. Japan continues to extend its influence through technology partnerships, overseas infrastructure investment, and long-term energy cooperation. Meanwhile, Gulf economies are actively transforming hydrocarbon wealth into investments in hydrogen, advanced manufacturing, artificial intelligence, and digital industries.
Although each follows a different pathway, they share one important conviction: energy is no longer simply a sector to regulate. It is an economic platform that shapes industrial capability, technological innovation, investment competitiveness, and strategic influence. This changing landscape presents Indonesia with a remarkable opportunity.
Few countries possess such a unique combination of strategic assets. Indonesia is Southeast Asia’s largest economy, the world’s largest archipelagic nation, and an influential member of major international forums including ASEAN, the G20, and BRICS. It possesses abundant oil and natural gas resources, one of the world’s largest geothermal potentials, a globally recognised biofuel industry, significant hydropower and solar resources, promising offshore renewable energy potential, and internationally important reserves of nickel, copper, and other critical minerals essential for the global energy transition.
Combined with a domestic market of more than 280 million people and a strategic location connecting the Indian and Pacific Oceans, these advantages provide Indonesia with an economic foundation that few countries can replicate.
Yet history offers a consistent lesson. Natural resources create opportunity, but institutions, industrial capability, and long-term policy determine whether that opportunity becomes lasting prosperity.
The central challenge, therefore, is not whether Indonesia possesses sufficient energy resources. It is whether Indonesia is prepared to redefine the role of energy within its national development strategy.
For decades, much of Indonesia’s energy policy has understandably focused on increasing production, expanding electricity access, and maximising export revenues from oil, gas, coal, palm oil, and mineral resources. These objectives remain important. But they represent only part of a much larger opportunity.
Indonesia’s next phase of development should not be driven primarily by resource extraction. It should be driven by the creation of an integrated energy economy, one in which energy becomes the foundation for advanced manufacturing, technological innovation, engineering services, financial markets, logistics, research, digital infrastructure, and international investment.
Within such an economy, natural resources are no longer the final product. They become the starting point for building industrial ecosystems capable of generating significantly greater economic value than commodity exports alone. Indonesia has already demonstrated that this transformation is possible.
The country’s downstream mineral strategy has shown how industrial policy can attract investment, expand domestic manufacturing, and strengthen participation in global supply chains. Likewise, Indonesia’s biodiesel programme illustrates how agricultural resources can simultaneously improve energy security, support rural development, and reduce dependence on imported fuels. These experiences should serve as blueprints for the next phase of Indonesia’s energy transformation.
The same ecosystem approach can be extended to sustainable aviation fuel, renewable diesel, geothermal equipment manufacturing, offshore renewable engineering, LNG services, battery technologies, carbon management, advanced grid infrastructure, and emerging digital energy systems.
The objective should not be to develop isolated industries. It should be to cultivate an interconnected ecosystem where innovation, manufacturing, investment, technology, and human capital continuously reinforce one another. Such an approach would fundamentally reshape Indonesia’s position within the Indo-Pacific.
Rather than being viewed primarily as a supplier of energy commodities, Indonesia should aspire to become the region’s preferred destination for energy investment, industrial partnerships, technological collaboration, and sustainable manufacturing.
That ambition requires more than abundant natural resources. It demands regulatory certainty, world-class infrastructure, globally competitive human capital, sophisticated financial markets, and institutions capable of adapting to rapid technological change.
Today’s investors increasingly seek countries that combine natural resources with policy consistency, efficient logistics, advanced industrial capability, and predictable governance.
Indonesia has every opportunity to offer precisely that combination, provided energy policy is integrated more closely with industrial strategy, education, infrastructure development, innovation, and economic diplomacy. Regional cooperation will be equally important in shaping Indonesia’s future energy economy.
Southeast Asia is entering a prolonged period of economic expansion marked by rising electricity demand, rapid industrialisation, digital transformation, and accelerating investment in low-carbon technologies. Initiatives such as the ASEAN Power Grid, cross-border electricity trade, regional LNG connectivity, and integrated supply chains should therefore be viewed not merely as infrastructure projects, but as strategic investments in the region’s long-term competitiveness.
Indonesia’s geography, market size, and resource diversity naturally position it at the centre of this evolving regional architecture. Its role, however, should not be defined by dominance. It should be defined by connectivity.
History shows that the most influential countries are rarely those that operate in isolation. They are the ones that connect markets, facilitate investment, accelerate technology transfer, and strengthen regional resilience through mutually beneficial partnerships.
Indonesia is uniquely positioned to become that connector. The nation’s location between the Indian and Pacific Oceans, combined with its expanding industrial base and abundant energy resources, gives the country an opportunity to serve as a regional hub for clean energy investment, advanced manufacturing, sustainable logistics, and technological collaboration. To realise this vision, energy diplomacy must evolve alongside industrial policy.
Indonesia should actively promote partnerships in critical minerals, renewable energy technologies, sustainable fuels, offshore engineering, electricity interconnections, and clean manufacturing. These partnerships should move beyond traditional trade relationships toward long-term industrial cooperation capable of creating value across multiple sectors of the economy.
The ASEAN Power Grid, for example, should not be viewed solely as an electricity project. It represents an opportunity to strengthen regional energy resilience, improve market efficiency, attract new investment, and support industrial competitiveness throughout Southeast Asia.
Likewise, cross-border cooperation in LNG infrastructure, battery manufacturing, hydrogen development, carbon management, and sustainable biofuels can create a more integrated regional energy ecosystem while reinforcing ASEAN’s collective economic resilience. Indonesia has every reason to lead this agenda, not through political dominance, but through economic credibility.
The country’s experience with downstream mineral development demonstrates that industrial policy can reshape participation in global value chains. Its biodiesel programme illustrates how energy security, rural development, and industrial policy can reinforce one another. These experiences provide valuable lessons not only for Indonesia, but for other emerging economies seeking to balance economic growth with energy transition.
Yet leadership ultimately depends less on resource abundance than on institutional quality. Natural resources may attract initial investment, but investors remain for entirely different reasons: policy consistency, transparent regulation, efficient infrastructure, skilled human capital, technological capability, and long-term strategic direction. This is where Indonesia’s next competitive advantage must be built.
Energy policy should no longer stand apart from industrial development, education, infrastructure planning, digital transformation, financial market development, and foreign policy. Instead, these agendas should reinforce one another within a single national strategy designed to strengthen Indonesia’s position in the Indo-Pacific.
The twenty-first century will not reward countries simply because they possess abundant reserves of oil, gas, or critical minerals. Those resources will remain strategically important, but geology alone no longer guarantees prosperity.
Competitive advantage increasingly belongs to nations capable of transforming natural resources into industrial capability, technological innovation, resilient institutions, and globally competitive economic ecosystems.
The distinction is profound. Resource wealth is inherited; economic competitiveness is deliberately constructed. Indonesia therefore stands at a pivotal strategic crossroads, one path continues to treat energy primarily as a commodity to be extracted, exported, and monetised, while the other recognises energy as the organising principle of a broader economic transformation.
Choosing the latter requires more than new projects or additional investment. It requires a fundamental shift in mindset.
Energy should no longer be viewed merely as a source of fiscal revenue or export earnings. It should become the platform upon which Indonesia builds its next generation of industries, technologies, skilled jobs, investment opportunities, and international partnerships.
In an increasingly competitive Indo-Pacific, the countries that exercise lasting influence will not necessarily be those producing the greatest volumes of energy. They will be those capable of creating the greatest value from every unit of energy they possess.
Indonesia does not need to become Asia’s largest energy producer to become one of its most influential energy economies. It needs to become the country that best integrates natural resources, industrial capability, innovation, finance, technology, logistics, and diplomacy into a coherent national development strategy.
If the twentieth century rewarded countries for the resources beneath their soil, the twenty-first century will reward those capable of transforming those resources into innovation, industrial excellence, and enduring economic resilience. That is Indonesia’s opportunity. It may also become Indonesia’s defining competitive advantage in the decades ahead.