Debate heats up over fuel subsidy
Dadan Wijaksana and Tony Hotland, The Jakarta Post/Jakarta
Renewed debate on whether to retain the hugely costly national fuel subsidy remerged on Wednesday, following a proposal by the government to set aside a whopping Rp 63 trillion (some US$7 billion) for the subsidy this year.
The immense cost of the subsidy, which has skyrocketed along with international oil prices during recent months, and the opportunity cost of not spending the money in more productive areas, left a bad taste in the mouth, legislators and businessmen said.
"The Rp 63 trillion subsidy spending is an awful lot of money. I can't even imagine how many schools, bridges and roads we could build (using the fund)," a lawmaker from the House of Representatives Budget Commission Soekardjo said.
Legislators and government officials have avoided talking about the increasingly untenable cost of the fuel subsidy recently, as they feared cutting the subsidy during election year would create serious social and political unrest.
A government that cuts the subsidy in an election year is also highly likely to lose.
A lawmaker from the reform faction, Hakam Naja, said he understood why the government had kept the subsidy, "that had 'multiple domino effects' on the lives of many Indonesians."
"Still, we must find a formula to allow the subsidy to go only to the intended target, the poor -- something that is not the case at the moment," he said.
The government on Tuesday revised upward its fuel subsidy spending for this year to Rp 63 trillion from the initial plan of Rp 14.5 trillion because of soaring oil prices.
But, critics say most of the subsidy has been enjoyed by motor vehicle owners who represent the upper income bracket in the country, while other unscrupulous entrepreneurs profit by smuggling the subsidized fuel products abroad.
Chairman of the National Economic Recovery Committee (KPEN) Sofjan Wanandi said the next government should dare to increase the domestic fuel prices (by cutting the subsidy), except for kerosene, which is largely consumed by poor people.
"The government must review whether the subsidy has really touched the ordinary people or whether it has mostly benefited certain people, such as those who smuggle oil abroad.
"I'm just afraid that one day, we won't have money left to maintain existing development projects, let alone increase them," he asserted.
Top businessman and former chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie said it was timely for the government to find a way to ensure only the poor enjoyed the fuel subsidy.
Aburizal said it was an urgent priority for the next government to create an domestic energy policy that made use of the country's abundant gas and coal reserves.
"It's about time we start using gas as an alternative. We can still export the oil, and we can use gas for domestic consumption," Aburizal said.