Ownership and Energy Efficiency in Indonesian Manufacturing

Abstract

Using 1996 and 2006 census data on medium-large plants in Indonesian manufacturing, we examine whether foreign multinational enterprises (MNEs) and stateowned enterprises (SOEs) used purchased energy more efficiently than local, private plants, finding that the correlation between plant ownership and total energy intensity, gas intensity, and coal intensity was generally weak in both years. Second, we ask whether energy efficiency in private plants was affected by the presence of MNEs or SOEs in high-energy-consuming industries. In 1996, private energy intensities were often positively correlated with the presence of SOEs and majorityforeign MNEs and negatively correlated with the presence of wholly foreign or minority-foreign MNEs, but in 2006 the corresponding results differed substantially. This suggests that ownership-related differentials in energy intensity and intra-industry energy-intensity spillovers are not pronounced. If policymakers are concerned with improving energy efficiency in Indonesian manufacturing, plant ownership should not be a major consideration.