Fuel campaign targets vehicle owners

Urip Hudiono, The Jakarta Post, Jakarta

After asking households and offices to make sacrifices in its nationwide energy conservation campaign, the government is now turning its attention to private vehicle owners.

A finance ministry official said the government was considering making it mandatory for some car owners to buy non- subsidized fuel, as well as increasing the purchase taxes and import tariffs for vehicles.

Head of the finance ministry's Financial, Economic and International Collaboration Studies Agency Anggito Abimanyu said on Wednesday that among measures being considered was instructing some car owners to use Pertamax fuel.

Anggito said his office would continue talks with the relevant ministries, including energy and mineral resources ministry, so the policy could be implemented without disrupting the country's automotive industry.

"We are yet to decide whether the requirement would be imposed on owners of cars with an engine capacity of 2,000 cc (cubic centimeters), 2,500 cc or 3,000 cc," he said.

"We also have to consider the fact that Pertamax is not always available across the country, which could be an inconvenience for car owners."

The price of Pertamax -- sold at Rp 4,000 a liter -- is now in line with global prices, compared to subsidized Premium at Rp 2,400 a liter.

Pertamax Plus is the other non-subsidized fuel available in some of the country's big cities.

As stated in the 2005 state budget, the government has set a fuel quota of 59.6 million kiloliters for the year, and Rp 76.5 trillion (some US$7.8 billion) in fuel subsidies.

Fuel consumption during the first semester, however, has already exceeded 10 percent of the government quota while soaring global oil prices have made the fuel subsidies likely to cost the government some Rp 120 trillion.

Given the situation, Minister of Finance Jusuf Anwar recently said the state budget deficit could reach Rp 35.2 trillion -- or 1.3 percent of the country's gross domestic product (GDP) -- up from its 0.8 percent estimation.

Anggito added that other options included imposing luxury taxes on the cars since increasing their import tariffs was considered ineffective.

He said most of the country's imported cars -- some 70 percent -- came from the countries grouped in the Association of Southeast Asian Nations following the establishment of ASEAN free trade area (AFTA).

"The agreement sets a limit of 5 percent on car import tariffs, and we have to abide by this," he said.

Therefore, Anggito said, one way of overcoming this was to impose a luxury tax on car purchases, as well as a progressive tax, whereby those who owned more than one car would pay higher taxes.

"We expect to be able to wrap up our deliberation of these policies soon, hopefully within the week, and immediately implement them," he said.