Fuel subsidies & poverty

Fuel subsidies & poverty

From Suara Pembaruan

Revoking or maintaining fuel price subsidies is a dilemma. The
swelling subsidy costs due to the world crude oil price of
US$70/barrel are worrying, because apart from the lack of funds,
our oil reserves are only good for about another 15 years.

Indonesia should therefore launch an energy revolution to
avoid dependence on oil imports within the next 15 years. This
can happen if fuel subsidies are totally abolished so that
alternative energy prices become more competitive.

Fuel subsidies have proven incapable of reducing poverty, so
that the state budget should be restructured by shifting the
Rp120 trillion or more in subsidy payments to such sectors as
education and health.

Revocation of the subsidies will initially produce negative
effects like rising inflation, but over the long term it will be
very positive for economic development. The government plan to
raise fuel prices for budget relief should be well directed
according to fuel needs and the subsidy shift allocation should
be transparent.

Meanwhile, the reasons for the subsidy cut and fuel price
increase should be communicated to the public, including non-
governmental organizations and students, so that the eventual
benefits will be enjoyed by ordinary people and can be
understood.

RONALD SURBAKTI