Economist: Hajj costs need new formula to avoid reliance on state budget aid

In the future, there needs to be a fuel surcharge clause or aviation fuel hedging by Garuda and Saudia, so that price risks are not directly borne by the state budget or pilgrims.

Jakarta (ANTARA) - Economist from the Center of Reform on Economics (CORE) Yusuf Rendy Manilet is pushing the government to restructure Hajj costs so as not to rely on assistance from the State Revenue and Expenditure Budget (APBN).

The statement responds to the government’s plan to cover an additional budget of Rp1.77 trillion for Hajj flight costs using APBN, which has been impacted by the rise in aviation fuel prices.

Yusuf, when contacted by ANTARA in Jakarta on Friday, said the structure of Hajj Pilgrimage Organisational Costs (BPIH) needs to be overhauled to be more responsive to price fluctuations.

So far, he said, the flight cost component is set at the beginning without an adjustment mechanism, while the aviation fuel component accounts for 30–40 percent of the total Hajj flight costs.

“In the future, there needs to be a fuel surcharge clause or aviation fuel hedging by Garuda and Saudia, so that price risks are not directly borne by the APBN or pilgrims,” Yusuf stated.

A comprehensive re-evaluation of the Hajj cost scheme is also being encouraged. This is because the portion of Hajj Pilgrimage Travel Costs (BIPIH) is currently around 60 percent, and the benefits value from the Hajj Financial Management Agency (BPKH) is about 40 percent.

“That benefits value is actually cross-subsidised from waiting pilgrims. If the APBN also patches it up, it means there are three layers of subsidies: waiting pilgrims, BPKH, and now APBN. This is unhealthy and not sustainable,” he added.

Yusuf did not deny that the APBN is still adequate to help support the risk of aviation fuel price increases on Hajj costs. However, the APBN structure is quite sensitive to energy prices and exchange rates.

The additional budget could potentially further pressure the fiscal space, which is not loose.

He also suggested that the government take a firm stance that this intervention is only one-time, not a permanent policy. If the state gets involved in holding prices for a specific service, it is feared that costs could become less transparent in the long term.

“The government must explicitly state that this is emergency handling due to the aviation fuel surge, not a regular scheme. Without that clarification, it will become a precedent that is hard to revoke in subsequent years,” he added.

This CORE economist also recommended that BPKH strengthen investments and diversify portfolios so that the benefits value grows faster than cost increases. According to him, this approach is the most sustainable strategy to contain pilgrim costs without relying on the APBN.