The problem, experts believe, stems from anti-Malaysian sentiments by the Indonesian public, who refuse to purchase Malaysian products. In a Jakarta Post report, the Indonesian Energy and Mineral Resources Ministry confirmed that Petronas has closed down 15 out of its 19 petrol stations in the country.
“They have been experiencing such low sales that they can no longer fund their operations,” the ministry’s downstream director Umi Asngadah was quoted as saying.
Umi said PT Petronas Niaga, Petronas’ Indonesian subsidiary, would most likely sell off the suspended stations to others firms and instead focus on its other products, such as lubricants. Following the liberalization of the Indonesian market in 2006, Petronas had entered the fray with the intent of providing competition to state-owned PT Pertamina in the marketing and distribution of petroleum products.
However, it is the other foreign competitors who appear to be faring better than Petronas. Global oil and gas giant Royal Dutch Shell, under PT Shell Indonesia, currently operates 57 petrol stations in Indonesia, of which 50 are located in Jakarta and the rest in East Java. The company plans to open eight new fuel stations this year.
It is understood that France-based Total Oil Indonesia, is also planning expansion, particularly in Jakarta and Bandung, West Java, adding to the 13 fuel stations it currently manages. Pertamina, whose stations are managed both directly by the company and as a franchise, operates around 5,000 stations. Pertamina is the only company allowed to distribute subsidized fuels.
Experts believe that anti-Malaysian sentiments by Indonesians may have played a role in Petronas’ unpopularity in the republic. Indonesia and Malaysia, as neighbouring countries, have experienced numerous disagreements and controversies. Despite being separated only by 64km of open water, disagreements have stemmed from matters such as territorial disputes to issues of national heritage, such as Malaysia’s claim of ownership to the Tor-Tor folk dance and Gordang Sambilan drum performances. The latter had earlier this year led to violent protests by Indonesians outside Malaysia’s embassy in Jakarta. News of the closure of Petronas stations has also resulted in a chorus of jeers from Indonesian Twitter users.
One of them, Ratna Octaviana through her account @nha_octa, said “Good! No more Malaysia in this country.”
Meanwhile, BHP Migas fuel distribution director Djoko Siswanto was quoted as saying that “there is a tendency from the public to refuse Malaysian products”.
“Our people did not like Malaysian products such as Petronas amid several problems both countries had between each other,” he said.
Djoko said Petronas had also pulled out of vying for a contract to distribute subsidized fuel, which is expected to be awarded by BPH Migas this year.
He said following Petronas’ pull out, Shell Indonesia is expected to replace the Malaysian firm.
Communications expert Effendi Gazali, meanwhile, was quoted as saying that the decision by Petronas was down to two factors. He said firstly, Petronas was unable to provide the same treatment to its customers as accorded by its competitors.
“On the other hand, the public already has this negativity toward them amid disputes and the treatment our people have received in Malaysia. These two aspects triggered the poor sales of Petronas, hence the decision to shut down their fuel stations,” he said.
Marketing expert Handi Irawan D., who is chairman of Frontier Marketing @ Research Consultant, said Petronas, along with other foreign firms such as Shell Indonesia and Total, had entered the Indonesian market in 1998 hoping that the government would gradually ease up on its fuel subsidy.
“They [Petronas] have been waiting for years for Indonesia to cut its subsidy but it never happened. On the other hand, people here prefer to buy Pertamina products because the company has been rehabilitating their services,” he said.
Handi said Petronas, in closing their fuel stations on the downstream sector, was only being more “realistic” than its foreign competitors in Indonesians. The other foreign firms, Handi believed, are still willing “to give it another try.”
“They have been experiencing such low sales that they can no longer fund their operations,” the ministry’s downstream director Umi Asngadah was quoted as saying.
Umi said PT Petronas Niaga, Petronas’ Indonesian subsidiary, would most likely sell off the suspended stations to others firms and instead focus on its other products, such as lubricants. Following the liberalization of the Indonesian market in 2006, Petronas had entered the fray with the intent of providing competition to state-owned PT Pertamina in the marketing and distribution of petroleum products.
However, it is the other foreign competitors who appear to be faring better than Petronas. Global oil and gas giant Royal Dutch Shell, under PT Shell Indonesia, currently operates 57 petrol stations in Indonesia, of which 50 are located in Jakarta and the rest in East Java. The company plans to open eight new fuel stations this year.
It is understood that France-based Total Oil Indonesia, is also planning expansion, particularly in Jakarta and Bandung, West Java, adding to the 13 fuel stations it currently manages. Pertamina, whose stations are managed both directly by the company and as a franchise, operates around 5,000 stations. Pertamina is the only company allowed to distribute subsidized fuels.
Experts believe that anti-Malaysian sentiments by Indonesians may have played a role in Petronas’ unpopularity in the republic. Indonesia and Malaysia, as neighbouring countries, have experienced numerous disagreements and controversies. Despite being separated only by 64km of open water, disagreements have stemmed from matters such as territorial disputes to issues of national heritage, such as Malaysia’s claim of ownership to the Tor-Tor folk dance and Gordang Sambilan drum performances. The latter had earlier this year led to violent protests by Indonesians outside Malaysia’s embassy in Jakarta. News of the closure of Petronas stations has also resulted in a chorus of jeers from Indonesian Twitter users.
One of them, Ratna Octaviana through her account @nha_octa, said “Good! No more Malaysia in this country.”
Meanwhile, BHP Migas fuel distribution director Djoko Siswanto was quoted as saying that “there is a tendency from the public to refuse Malaysian products”.
“Our people did not like Malaysian products such as Petronas amid several problems both countries had between each other,” he said.
Djoko said Petronas had also pulled out of vying for a contract to distribute subsidized fuel, which is expected to be awarded by BPH Migas this year.
He said following Petronas’ pull out, Shell Indonesia is expected to replace the Malaysian firm.
Communications expert Effendi Gazali, meanwhile, was quoted as saying that the decision by Petronas was down to two factors. He said firstly, Petronas was unable to provide the same treatment to its customers as accorded by its competitors.
“On the other hand, the public already has this negativity toward them amid disputes and the treatment our people have received in Malaysia. These two aspects triggered the poor sales of Petronas, hence the decision to shut down their fuel stations,” he said.
Marketing expert Handi Irawan D., who is chairman of Frontier Marketing @ Research Consultant, said Petronas, along with other foreign firms such as Shell Indonesia and Total, had entered the Indonesian market in 1998 hoping that the government would gradually ease up on its fuel subsidy.
“They [Petronas] have been waiting for years for Indonesia to cut its subsidy but it never happened. On the other hand, people here prefer to buy Pertamina products because the company has been rehabilitating their services,” he said.
Handi said Petronas, in closing their fuel stations on the downstream sector, was only being more “realistic” than its foreign competitors in Indonesians. The other foreign firms, Handi believed, are still willing “to give it another try.”
[Source: MD]
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