A Comparative Study between Indonesian, Malaysian, and Norwegian Fiscal Regimes

Grade Master’s Dissertation – 74

A Comparative Study Between Indonesian, Malaysian and Norwegian Fiscal Regimes



 This research is considered to be an important matter as fiscal regime has an important role in the oil and gas industry in every country in this world. The fiscal regime applied in each country will affect the investment decisions of the investors. The fiscal systems discussed in this research were the Production Sharing Contract, pioneered by Indonesia and Concessionary system adopted by Norway.  This research aims to compare the practice of Indonesian PSC, Malaysian PSC and Norwegian R/T system to get a deeper understanding of petroleum fiscal system application in different countries, for the purpose of further developing the Indonesian economy.  There are three main objectives in this research, to analyse and review the practice of petroleum fiscal system in Indonesia, Malaysia, and Norway; to review the impact on the economy of the petroleum fiscal system applied in the countries; and to recommend an enhancement of petroleum fiscal system in Indonesia to develop the Indonesian petroleum industries.

This research used both primary and secondary data.  The primary data was obtained by interviewed some participants from three different views participants (contractor view, government view and consultant view from Indonesia and international).  Numerical data was obtained internally from one of the oil and gas company in Indonesia.  These data was qualitatively analysed by analysing the primary data and combined with critical review on the literature reviews.  These data was also quantitatively analysed by calculating the government take and contractor take using the petroleum fiscal applied in the countries.  Triangulation research methodology has been applied in this research.

It was found that current issues in the petroleum industry in Indonesia mainly related to legal certainty in the country.  Indonesian PSC is a good system but what matters was the implementation of the regulations enacted by many government institutions.   Libyan EPSA was found interesting to be discussed in this research as it used gross PSC for the fiscal system.

It was concluded that even though Indonesian PSC is good enough, but it might be good for Indonesia to look at the Malaysian PSC with the R/C PSC concept rather than to Norwegian R/T system.  Indonesia might also learn from Libyan EPSA III as it was found attractive for investors in terms of shares.   In this case, it is recommended that Indonesia does not only improve the stability of the system, but also improve the system itself to improve the attractiveness of the PSC.  This will improve the Indonesian economy as this sector has significant role in the economic growth of Indonesia.

Leave a Reply