Indonesia’s Kerosene to Lpg Conversion Program

Topics: Marketing, Indonesia, Politics of Indonesia Pages: 4 (1278 words) Published: May 4, 2012
Indonesian government is embarking in a new economic project that is changing its current fuel consumption (Kerosene) by liquefied petroleum gas (LPG). Due to the low quality of life, Kerosene is widely used as cooking fuel by Indonesians household and commercial sector. It is a major subsidized fuel where its usage is over sixty per cent of the 230 million populations. Therefore, this kind of announcement can be the appropriate spark for BlueGas Company to think how this declaration can be a lucrative investment for the organization in the Indonesian market. BlueGas is a leading global player for LPG with the presence in 80 countries, so it is very obvious that this company’s management promulgates an intensive market study by developing an effective business plan taking into consideration several criteria like market issues, facts, market analyses, actions and consequences. However, the major question still; should BlueGas Company invest in Indonesia? After reading this case study which was describing the market situation, we pointed out certain issues that must be taken into consideration like; High cost of investment in LPG cylinders which can deter players to flood the market with its product irrationally. People are worried about the potential change of lifestyle. Few claimed that food would never taste the same using LPG as cooking fuel. The government allows only a year for the conversion from Kerosene to LPG. This is a short notice for a company to establish an effective and efficient operation special with a big market like Indonesia. Also, the prices of LPG are higher than Kerosene and more than 70 per cent of the population is below average national income. This was translated by demonstrations and objections on the street since it is not affordable by most of dwellers. Future government policies on foreign investors are still a concern to potential global market player. Since PERTAMINA raise concerns whether the Indonesian government could maintain...
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