KOMPAS.com – A region’s dependence on coal mining is now increasingly becoming a source of vulnerability rather than economic strength. Areas that rely heavily on coal are highly exposed to market fluctuations and tightening export policies.
For instance, the Indonesian government has set a coal production target of around 600 million tons for 2026, a 24 percent decrease from 2025.
The Ministry of Energy and Mineral Resources (ESDM) recorded Indonesia’s coal production at 790 million tons in 2025, down 5.5 percent compared to 2024. Meanwhile, initial production quotas for several companies in 2026 have been cut by 40–70 percent compared to their 2025 realization.
The reduction in production targets aligns with increasingly complex global geopolitical uncertainties and weakening demand from key export destinations, particularly China and India.
These shifts in market dynamics and global direction pose real risks to the sustainability of regions whose economies are heavily dependent on coal.
According to a study by the Institute for Essential Services Reform (IESR) titled Just Transition in Indonesia’s Coal Producing Regions, coal mining royalties contribute around 20–27 percent to regional government budgets (APBD).
Therefore, transformation efforts must be directed toward diversifying local economies in ways that are competitive and interconnected.
“This means that regions should not only look for substitute sectors, but also build synergy between sectors to create stronger local economic value,” said Martha Jesica Solomasi Mendrofa, Manager of Policy Research and Just Energy Transition at IESR, in a written statement on Tuesday (April 14, 2026).
The IESR study also identifies several leading sectors that can be developed in coal-producing regions. In Paser Regency, sectors with strong potential include financial services, manufacturing, and education.
Meanwhile, in Muara Enim Regency, sectors that can be strengthened include manufacturing and accommodation, food, and beverage services. Identifying priority sectors, commodities, and their supply chains is crucial for economic transformation efforts in coal-producing regions.
According to Martha, this economic transformation must be supported by three key factors: governance and financing mechanisms that can drive programs with direct impacts on regional income, the utilization of technology for processing and business development, and the strengthening of human resources.
Meanwhile, Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, emphasized that economic transformation cannot rely solely on reducing or controlling coal production. It must also promote the growth of renewable energy and create new, sustainable economic sectors.
He added that advancing renewable energy and building a sustainable new economy are shared responsibilities between the government and the private sector.
“Economic diversification cannot rely solely on central or local governments. Companies must also proactively secure their future,” he said.
Source: Kompas