Govt proposes huge fuel subsidy hike<\/p>\n
Dadan Wijaksana, The Jakarta Post\/Jakarta<\/p>\n
The fuel subsidy may jump by 334 percent of its initial figure
\ndue to soaring oil prices, the government said on Tuesday as it
\nproposed a revision to the 2004 state budget.<\/p>\n
A fuel subsidy is necessary because the country also imports
\nfuel to meet national demand.<\/p>\n
Minister of Finance Boediono said the government might have to
\nspend a whopping Rp 63 trillion (US$7.08 billion) for the fuel
\nsubsidy -- compared to Rp 14.5 trillion as budgeted initially --
\nas the oil price assumption had been revised upward to $36 per
\nbarrel from $22 per barrel to better reflect current developments
\nin international oil prices.<\/p>\n
Oil prices have been soaring upon concerns over disruptions to
\nsupply and strong demand from energy-hungry countries like China
\nand India, reaching to near $50 per barrel last week.<\/p>\n
The government has said it would not raise fuel prices at home
\ndespite soaring world prices to ensure political stability during
\nelection year. Fuel prices were last raised in January 2003.<\/p>\n
However, high oil prices have renewed concerns about the
\ncostly fuel subsidy, as the revised figure almost equals the Rp
\n69.6 trillion development spending for this year, and because the
\nsubsidy has been enjoyed largely by car owners of the upper
\nincome bracket -- not to mention the rampant smuggling of
\nsubsidized fuel products to neighboring countries.<\/p>\n
Some experts have said the fuel subsidy policy should be
\nabandoned immediately, as it would lead eventually to a fiscal
\ndisaster and affect the overall economy.<\/p>\n
"This is a consequence of the government applying a method of
\nsubsidy that basically allows the haves to enjoy it. It's said
\nthat even those who drive a Mercedes Benz can benefit from it,"
\nHouse Budget Commission chairman Abdullah Zainie said.<\/p>\n
"(The House) has been formulating a straight subsidy scheme
\nthat will serve only those people in need of it. It's not going
\nto be easy, as it has to be backed up by solid research and data
\non the poor, while a sound control mechanism has to be set up to
\nminimize abuse. It's difficult, but feasible."<\/p>\n
The House will decide within a month whether to accept the
\ngovernment revision of the 2004 state budget.<\/p>\n
Meanwhile, Boediono said the expanded fuel subsidy would not
\nhave a serious impact on the state budget, as deficit was
\nprojected to increase only slightly, from 1.2 percent to 1.3
\npercent of the gross domestic product.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-proposes-huge-fuel-subsidy-hike-1447893297",
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