DPR Budget Committee: Begin Energy Subsidy Reforms Amid Gulf War
Jakarta (ANTARA) - The House of Representatives Budget Agency (Banggar DPR) of the Republic of Indonesia has called for the immediate start of energy subsidy policy reforms amid the Gulf War situation.
Banggar DPR RI Chairman Said Abdullah stated that Indonesia needs to implement reforms promptly, as no one knows exactly when the armed conflict between Iran and the United States and Israel will end.
“If we can take reform steps earlier, in the future the government will have more fiscal room to face an oil shock,” Said said in a statement received in Jakarta on Wednesday.
He said that LPG subsidies should be directed to the 40 percent of the population with low incomes or the bottom six deciles. Generally, they work as micro-businesses, small fishermen, and agricultural labourers or small farmers.
According to Said, the programme for the 40 percent of low-income households could be implemented with several technical options, namely accurate data and beneficiaries using biometrics.
Said said that the Indian government has implemented the Aadhaar system containing biometric identity numbers directly linked to the subsidy recipients’ bank accounts.
Said opined that the advantage of this system is that it is difficult to manipulate because subsidies are not given in cash, but the LPG subsidy assistance is channelled through the recipient’s account and can only be used for transactions to buy LPG via biometrics.
“In India, with its larger population, this programme can run. It should be possible to implement in Indonesia as well,” he said.
Said opined that as a consequence of the closed LPG subsidy policy, sales of 3-kilogram LPG in the market can be adjusted to economic or market prices, not subsidy prices, so the subsidy burden will decrease.
Meanwhile, for diesel and Pertalite subsidies, he said, barcode data entry through the MyPertamina application must be revalidated.
PT Pertamina (Persero) must adjust data between diesel and Pertalite subsidy users and motor vehicle ownership data (STNK) at the police.
In this way, the focus of fuel oil (BBM) subsidies is prioritised for small fishing boats, agricultural equipment for small farmers, to motorcycles for MSME actors, so four-wheeled vehicles must be prohibited from using subsidised diesel and Pertalite.
On the other hand, the Banggar Chairman reminded that electricity subsidy beneficiaries also need to be revalidated by PT PLN (Persero).
He said that PLN can integrate data from the National Socio-Economic Survey (Susenas), so that deciles of more prosperous communities can be upgraded and asked to exit from using 900 Volt Ampere capacity or below.
“Conversely, those whose deciles drop, entering poor households, can enjoy 900 VA capacity or below,” Said said.
In line with that step, he continued, PLN can gradually develop an electric stove programme for poor households, so poor households have two options, namely using subsidised LPG or electric stoves.
In that way, he said, PLN can reduce electricity compensation costs for people in deciles 7-10, namely household groups in the top 30 to 40 percent or more prosperous.