Analyst says direct cash subsidies better targeted than fuel subsidies

Jakarta (ANTARA) - Economist and Director of International Collaboration at Indef, Imaduddin Abdullah, has said that providing subsidies directly to recipients or individuals is better targeted than subsidising goods such as fuel.

“Subsidies need to shift, from subsidising goods to subsidising people,” Imaduddin said when contacted in Jakarta on Friday.

According to him, as long as the government continues to distribute subsidies through goods, it will be difficult to control them.

Meanwhile, Imaduddin continued, if subsidies are distributed through individuals or beneficiaries, they will be far better targeted, because the market price of goods will be the same without any need to distinguish between subsidised and non-subsidised products.

He assessed that removing or tightening energy subsidies is quite difficult, especially politically, because whenever there is talk of control, it is interpreted as leading to price increases.

“Indeed, removing subsidies is not an easy matter politically; it is always linked between removing energy subsidies and the occurrence of price increases,” he said.

For that reason, he urged the government to find the right momentum when it wants to control energy subsidies, one of which is when prices are falling.

“That is why we always say that if there is to be a reformulation of subsidies, it is best done when prices are declining,” he said.

Previously, Finance Minister Purbaya Yudhi Sadewa said that control of fuel subsidies, especially for Pertalite, would be carried out gradually and that Pertamina’s system is already capable of supporting such restrictions.

“We are discussing the possibility of implementing restrictions on Pertalite subsidies for the upper levels,” Purbaya said in Jakarta on Tuesday (11/8/2026) after receiving a visit from Energy and Mineral Resources Minister Bahlil Lahadalia.

He said that fuel subsidy control could be implemented by not allowing people in deciles 9 and 10 to buy Pertalite; they would have to buy non-subsidised fuel.

According to him, fuel subsidy control is still under discussion and is expected to be implemented not long after all systems are ready.

“Perhaps those in deciles 9-10. So that a few months later we can reduce it gradually. We are currently studying the system,” he said.