WESTMINSTER INTERNATIONAL UNIVERSITY IN TASHKENT
COURSEWORK SUBMISSION FORM
STUDENT USE
Global Business
Environment
Module Name
Module Code
STAFF USE
First Marker’s
(acts as signature)
Code: 4BUSS002C
Lecturer Name
Dilshoda Rahmonova
UoW Student IDs
19806354
WIUT Student IDs
00015992
Deadline date
1st of December 2023
Assignment Type
Individual
Second Marker’s
(acts as signature)
Agreed Mark
For Registrar’s office use only (hard copy
submission)
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COURSEWORKS must be submitted in both HARD COPY (to the Registrar’s Office) and
ELECTRONIC unless instructed otherwise.
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submission instructions.doc
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MARKERS FEEDBACK (Continued on the next page)
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Executive Summary
This report dives into the operations of PT Pertamina (Persero), Indonesia's largest state-owned oil and gas
company and my focus spans political, economic, socio-cultural, and technological aspects to guide Pertamina
in a volatile energy market. Highlights of the report include Pertamina's contribution to national
competitiveness, environmental initiatives, and Nicke Widyawati's transformative leadership. Actionable
recommendations emphasize the importance of diversification, innovation, and alignment with Indonesia's
environmental goals. This summary gives a reader a quick look, encouraging him to explore more detailed
insights. It helps to guide Pertamina toward resilience and leadership in the changing energy world.
Table of Contents
Introduction ………………………………………………………………………………. 2
Findings and Analysis …………………………………………………………………..... 2
Political Environment ………………………………………………………………. 2
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WESTMINSTER INTERNATIONAL UNIVERSITY IN TASHKENT
Economic Environment ………………………………………………………………….. 3
Social and Cultural Environment ………………………………………………………….. 3
Technological Environment ………………………………………………………………….... 3
Positive impacts ……………………………………………………………. 3
Leadership Solutions …………………………………………………………………. 4
Recommendations …………………………………………………………………………… 4
Conclusion …………………………………………………………………………………… 5
Reference List ……………………………………………………………………………….. 6
Introduction
PT Pertamina (Persero), a major state-owned oil and gas company in Indonesia, has a strong presence in the
energy sector. This report delves into Pertamina's complexities, examining the complex interplay of political,
economic, socio-cultural, and technological factors influencing its trajectory. Beyond the corporate sphere, we
highlight Pertamina's admirable efforts, elucidating its significant impacts on job creation, environmental
stewardship, and economic growth. The culmination of these analyses results in actionable recommendations
for Pertamina's strategic navigation through changing global energy dynamics. This report, in essence, serves as
a comprehensive compass, guiding Pertamina toward a resilient and sustainable future. The goal of this
investigation is to decipher the complexities and opportunities that define Pertamina's role in Indonesia's energy
landscape.
Findings and Analysis
PT Pertamina (Persero) is an Indonesian state-owned oil and gas company with the largest market share in its
respective industry. PT Pertamina (Persero) should concentrate on developing potential socio-cultural (i.e.
higher education) potentials. Willingness to pay for environmentally friendly products) and technological (i.e.
rapid innovation) NRE technology advancements result in lower implementation costs) factors while keeping
political (i.e. 23% NRE incorporation by 2025 and Indonesia's nickel ban) factors in mind and economic (high
reliance on oil performances and lower cost for solar PV implementation) which have been stated in a more
thorough understanding way below about the differences between key environmental variables and their
implications for the industry.
1. Political Environment:
Indonesia maintains very good foreign relations with its neighbors and avoids becoming embroiled in conflicts
between other countries. It is a founding member of the Association of Southeast Asian Nations (ASEAN) and
the East Asia Summit. Indonesia is also a member of the United Nations, the Organisation of Islamic
Cooperation (OIC), and the World Trade Organisation (WTO). It has, however, suspended its membership in
the Organisation of Petroleum Exporting Countries (OPEC) after many years of membership (OPEC, 2023).
Also, Indonesia has begun to work towards a 24% renewable energy contribution to total power production by
2025 (UU No.30/Th.2007). Through Ministerial Regulation No. 17/2020, Indonesia has also maintained an
export ban on nickel (an important component of lithium batteries) since the beginning of 2020. By giving its
large share of the Indonesian power production market, PT Pertamina (Persero) should strive for renewable
energy diversification. PT Pertamina (Persero) should also consider leveraging Indonesia's position as the
world's largest nickel producer and export ban in developing lithium batteries for electric vehicles.
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WESTMINSTER INTERNATIONAL UNIVERSITY IN TASHKENT
2. Economic environment:
The economic environment is a major topic of discussion in this Indonesia PEST analysis. By the end of 2023,
Indonesia's nominal GDP is expected to be around $1243.00 Billion (Trading Economics, 2023). The country's
economy expanded dramatically over the last two decades, despite being severely impacted by the Asian
financial crisis. Global lockdowns have slowed the economy as well, though a moderate recovery is visible.
The Indonesian economy is dominated by private companies and foreign investors; however, the government is
one of the largest business owners. Agriculture, oil and gas, mining, hospitality, automotive, and hydrocarbons
are the most important industries in the country. Due to the oil and gas industry contributes significantly to
Indonesia's GDP (12% of total GDP in 2018), it is vulnerable to fluctuations in global crude oil prices. It should
be noted that palm oil is Indonesia's largest export, while refined petroleum oil is its largest import.
Furthermore, the cost of solar energy has decreased over time (Niranjan, 2020). As one of the largest companies
in the oil and gas industry, PT Pertamina (Persero) should diversify its outputs to mitigate future global oil price
drops. Furthermore, PT Pertamina (Persero) has the opportunity to process one of Indonesia's main exports
domestically and produce green fuel as an output. Furthermore, PT Pertamina sees solar energy as an appealing
potential large-scale application.
3. Socio-cultural Environment:
Indonesia is a country made up of thousands of islands located between Asia and Australia. It has
approximately 17,500 islands, of which 7,000 are uninhabited (Encyclopedia Britannica, 2023). It is a lovely
country with plenty to offer both domestic and international visitors. Unsurprisingly, it attracts millions of
international visitors each year. However, it is worth noting that the Indian Ocean tsunami killed thousands of
people and severely damaged buildings, roads, and farmland. Aside from earthquakes and tsunamis, Indonesia
faces several other environmental challenges, including deforestation, rapid urbanization, over-exploitation of
marine resources, air pollution, traffic congestion, and water pollution. According to the Global Web Index
(2018), approximately 55% of consumers (Gen-Z, Millennials, Gen-X, and Baby Boomers) are willing to pay
more for environmentally friendly products, which will reduce long-term demand for fossil fuels. PT Pertamina
(Persero) can diversify its environmentally friendly energy resources and infrastructure, such as the use of
biofuels, energy storage, and solar photovoltaics (PV), to adapt to the relatively new consumer behavior.
4. Technological Environment:
It is worth noting that technological development is heavily reliant on the availability of skilled labor forces,
which Indonesia lacks in abundance. However, it is worth noting that the Indonesian government intends to
make it easier for start-ups to hire foreign workers to address the skills shortage in the thriving tech sector. It is
also working on high-speed Internet, ultra-low latency, and enhanced connectivity. Other challenges
confronting the country include data security, protectionist regulations, and a lack of payment and delivery
infrastructure. Moreover, the fuel industry is rapidly developing in the processing of biodiesel as a substitute for
oil palm fuel (GAPKI, 2017). Other renewable energy technologies, such as solar, wind, geothermal, and
hydro-based, are also rapidly developing, which correlates to lower implementation costs. PT Pertamina
(Persero)'s involvement in renewable energy development and research will be processed much faster in the
current stage of technological advancements compared to previous years, where such R&D would be much
more expensive and slower to make it a viable investment.
Positive Impacts
Pertamina, Indonesia's energy leader, plays a critical role in advancing the nation's industry, with significant
benefits for the government. Pertamina's achievements include completing 161 projects, increasing Indonesia's
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global competitiveness. These initiatives not only create jobs, but also improve energy resilience, reduce
imports, reduce emissions, and promote economic growth. Moreover, Pertamina's Merah Putih Catalyst Plant,
in particular, aims to meet national demand, reduce imports, and improve fuel quality, providing the
government with strategic advantages. The company also demonstrates technological innovation in areas such
as petrochemical processing and refinery revitalization, which contributes to industrial progress. Furthermore,
The company has committed to the Net Zero Emissions 2060 target, which is in line with sustainability goals.
This commitment, combined with efforts in Environmental, Social, and Governance (ESG) principles, positions
Pertamina as a key driver of Indonesia's long-term development, technological innovation, and economic
growth. The government stands to benefit not only from increased competitiveness but also from Pertamina's
positive economic and environmental impacts.
Successful Leadership Approaches
Because of the Pertamina Group's commitment to achieving sustainability and suitability for society and the
future (A Future-Fit Society), the President Director of PT Pertamina (Persero), Nicke Widyawati, received an
award as Main Green Leadership from the Ministry of Environment and Forestry (KLHK).
Pertamina has prepared a roadmap for the energy transition and implemented sustainable business practices
through the Pertamina Group's Sustainability Policy, Strategy, and Initiatives, led by her. Pertamina's goal is to
become an environmentally friendly, socially responsible, and well-governed company.
Nicke Widyawati also continues to oversee Pertamina's sustainability strategy, which is translated into 10
Sustainability Focus. To achieve these goals, she created 16 initiatives based on the Future-Fit Society
framework. It includes a net-zero roadmap, decarbonization, a systemized biodiversity program, Delivering
NRE Capacity Commitment (RJPP), Reducing Environmental Footprint, Enhancement of Health and safety
Aspect, Process Safety Management, Promoting Human Rights, Sustainability Focused Research and
innovation, improved accessibility to Energy for the Community, Cyber Security Structure and Culture,
Enhanced GCG Management System, ESG Operating Model, Evaluate & Implement ESG Financing, ESG.
The president received the prestigious Main Green Leadership award recently for successfully implementing
critical environmental initiatives. This award, recognized by a decree issued by the Minister of Environment
and Forestry, demonstrates Pertamina's commitment to environmental management.
Pertamina is actively reinforcing its environmental programs, to reduce its environmental footprint and increase
positive biodiversity impacts. Furthermore, the company directly engages communities through its new and
renewable energy development initiatives. As a result of these efforts, the company received 20 gold awards
domestically and an ESG Score of 22.1 internationally, ranking second in the Oil and gas sub-industry globally.
Vice President KH Ma'ruf Amin presented the Main Green Leadership Award, commending Pertamina for
inspiring sustainable practices.
The importance of the Programme for Pollution Control, Evaluation, and Rating (PROPER) was highlighted by
Nicke. PROPER is a critical guide in developing sustainable programs and addressing future energy challenges
as Pertamina strives to transform its energy business.
Recommendations
Following an examination of Pertamina's circumstances, I have identified two concrete and feasible future
recommendations: the company should keep a close eye on political developments concerning renewable
energy targets and export bans on key components such as nickel. Establish strategic partnerships with the
Indonesian government to align business goals with national energy and environmental objectives.
To mitigate the risks associated with global oil price fluctuations, diversify output beyond traditional oil and
gas. Investigate domestic processing opportunities for Indonesia's major exports, which would contribute to
economic growth and sustainability.
Furthermore, Pertamina should extend investments in biofuels, energy storage, and solar technologies to
capitalize on consumer willingness to pay for environmentally friendly products. Consider public awareness
campaigns to educate consumers about Pertamina's commitment to environmentally responsible practices.
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WESTMINSTER INTERNATIONAL UNIVERSITY IN TASHKENT
Invest in technological advancements, particularly renewable energy research and development, to align with
Indonesia's goal of increasing renewable energy incorporation. Work with educational institutions to address
the skilled labor shortage in the thriving technology sector.
The main purpose of these recommendations is to address the major challenges that the company is facing and
to ensure its long-term viability and success in the changing global energy market.
Conclusion
Finally, Pertamina is at the forefront of Indonesia's energy landscape, with a unique opportunity to drive longterm growth. The recommendations, which cover political, economic, socio-cultural, and technological
considerations, highlight Pertamina's ability to have a positive impact. Pertamina can navigate industry
challenges and contribute significantly to Indonesia's long-term prosperity by diversifying output, encouraging
innovation, and aligning with Indonesia's environmental goals. Nicke Widyawati's exemplary leadership sets
the tone for a future in which Pertamina continues to lead in environmentally conscious and economically
impactful endeavors. A proactive approach to political and economic shifts, as well as a commitment to societal
and technological advancements, will be critical as Pertamina moves forward. By adhering to these principles,
Pertamina positions itself as a key player in shaping Indonesia's sustainable and resilient future.
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References
Fadya, P. and Brilian, A. (2021).
https://www.researchgate.net/publication/350964843_Going_Upward_PT_Pertamina_Holistic_Approa
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https://www.researchgate.net/profile/PutuFadya/publication/350964843_Going_Upward_PT_Pertamina_Holistic_Approach_Towards_New_Ren
ewable_Energy/links/607d0bc2881fa114b4110b39/Going-Upward-PT-Pertamina-Holistic-ApproachTowards-New-RenewableEnergy.pdf?origin=publication_detail&_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InB1YmxpY2F0a
W9uIiwicGFnZSI6InB1YmxpY2F0aW9uRG93bmxvYWQiLCJwcmV2aW91c1BhZ2UiOiJwdWJsaW
NhdGlvbiJ9fQ [Accessed 30 November 2023].
HowandWhat.net. (2019). PESTEL analysis of Indonesia | howandwhat. howandwhat. Available from
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Pertamina (Persero), P.T. (2022). Committed to Create a Sustainable Future, Nicke Widyawati Wins
Green Leadership | Pertamina. www.pertamina.com. Available from
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Pertamina (Persero), P.T. (2023). Pertamina Supports the Government in Achieving National Strategic
Programs | Pertamina. www.pertamina.com. Available from https://www.pertamina.com/en/newsroom/news-release/pertamina-supports-the-government-in-achieving-national-strategic-programs
[Accessed 30 November 2023].
Shaw, A.A. (2021). PESTLE Analysis of Indonesia. SWOT & PESTLE Analysis. Available from
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