Database Overhaul Key to Energy Subsidy Reform

Senior Policy Advisor at the International Institute for Sustainable Development (IISD) Anissa Suharsono has stated that overhauling the beneficiary database is key to the success of energy subsidy reform. This step is considered important to ensure subsidies are better targeted while maintaining fiscal stability and supporting the acceleration of the energy transition. She conveyed this view during the Kompas.com Talks event titled ‘The Urgency of Energy Subsidy Reform for Fiscal Stability and Accelerating the Energy Transition’ at the Kompas Gramedia Building, Palmerah, Jakarta, on Tuesday (21/7/2026). According to her, energy subsidy reform should not be interpreted merely as a policy to raise fuel oil (BBM) prices, but rather as a comprehensive overhaul of the subsidy distribution system. ‘When we talk about energy subsidy reform, do not immediately interpret it as a price increase. This is a reform of the entire system,’ Anissa said, quoted on Wednesday (22/7/2026). She explained that an ideal reform begins with improving the beneficiary database, followed by the formulation of a compensation mechanism, transparent public communication, and the provision of a complaint mechanism after the policy is implemented. Based on the experience of several countries, including India, subsidy reform should also be carried out gradually over a period of five to ten years to build public trust. Head of the Center of Industry, Trade and Investment at INDEF, Andri Satrio Nugroho, said that subsidy reform must be accompanied by government transparency regarding the use of the budget resulting from efficiency savings. According to him, the public must clearly understand the benefits obtained from reallocating subsidy spending to more productive sectors. Andri also highlighted the significant leakage of energy subsidies because affluent groups also enjoy various forms of subsidies. Therefore, low-income groups must remain a priority for protection in any subsidy reform policy. Meanwhile, Deputy Speaker of the People’s Consultative Assembly (MPR RI) Eddy Suparno stated that energy subsidy reform must prioritise the principles of right sizing and right targeting so that aid is received by those who are entitled to it. He also encouraged a change in the subsidy mechanism from commodity-based to direct transfers to beneficiaries, supported by a more accurate database. ‘Reform is not about reducing protection for the people. This reform is about changing the way the state protects its citizens to be fairer and more efficient,’ he said. Expert Staff at the Government Communication Agency, Fitra Faisal, added that the government remains committed to accelerating the energy transition through various clean energy development programmes. Meanwhile, the Dean of the Faculty of Economics and Business at the International Islamic University of Indonesia (UIII), Teguh Yudo Wicaksono, assessed that energy subsidy reform is a task that cannot be postponed any longer, as it relates to energy security, fiscal space, and national energy independence.