New Government Should Revoke Subsidized Fuel

 
Fitri Novia Heriani, Jazmi Adlan Bohari
 
The issue of subsidized fuel has always haunted the Indonesian President’s administration, particularly after the crisis and reform movement in the late 1990s. Subsidized fuel has and continues to be a contentious political issue.
 
Changes to fuel prices almost immediately impact on the livelihood of many Indonesians, particularly those in the lower income brackets who find it harder to absorb increased costs.
 
Over the last decade, the Yudhoyono administration has continually faced objections from its political opponents and the public, when it has attempted to try to raise subsidized fuel prices.
 
The prevalent view is that the majority of the public generally needs subsidized fuel as their purchasing power is considerably low and they cannot afford to pay for non-subsidized fuel.
 
This is also the view taken by the Yudhoyono administration’s political opponents. However, subsidized fuel has been and remains a major burden on the State Budget (APBN) which is why President Yudhoyono decided to raise its price.
 
Taking into account that the presidential election is only two months away, the public is anticipating that the new President will be able to come up with a better policy to solve the subsidized fuel issue.
 
Suryo Bambang Sulisto, Chairman of the Indonesian Chamber of Commerce and Industry (KADIN), has commented that current energy policy has taken a wrong turn as the subsidy is still provided, even though it excessively burdens the State Budget.
 
Mr. Sulisto hopes the new administration will pay better attention to energy policy and reduce or even revoke subsidized fuel. One foundation for this view is that the subsidy could better be allocated to more productive areas such as agriculture and education.
 
“There will be a significant impact if we can solve the subsidized fuel issue,” Mr. Sulisto said last Tuesday.
 
In terms of which candidate is more likely to be able to deal with this issue, Mr. Susilo believes that all the current three possible presidential candidates have the ability to solve the energy issue.
 
He said that Joko Widodo, Abu Rizal Bakri, and Prabowo Subianto— currently the three most likely candidates that will likely run for Presidency—all have a good understanding of business and can attract investors to put their money in Indonesia.
 
“Whoever wins the election is expected to continue the policies that facilitate inward investment,” Mr. Sulisto said.
 
Lana Soelistianingsih, economist at the University of Indonesia, agrees that the new administration should be brave in reducing or revoking subsidized fuel. Oil supply in Indonesia, as she pointed out, is decreasing while energy product is getting more expensive and recourses more scarce.
 
As part of a solution to the problem, the Government also needs to address the problem of the lack of adequate infrastructure and transportation. The new administration will be expected to be able to provide good public transportation so that fuel consumption can be reduced.
 
“Of course we cannot do this in a year. This is a long term project, but the Government needs to start now. People also need to be informed that global fuel prices are rising, so they will need to use public transportation instead,” she concluded.
 
(hot/kc)