Fuel subsidy for vehicles

The fuel subsidy for motorcycles and cars is creating more and more financial problems for Indonesia. The subsidy disproportionately benefits the "haves" as opposed to the "have- nots", for the latter more often than not are not even able to buy bicycles, much less motorcycles and cars.

Complete elimination of the subsidy will permit the government to use the funds thus freed up to help those who most need help by providing, for example, really free and adequate schools, functioning health care units (Puskesmas) and potable water.

The reduction in that subsidy earlier this year has proved ephemeral in the face of the drastic increases in the world market price of oil. The most feasible way for the Indonesian government to stanch the outflows of its revenues due to that subsidy is to gradually eliminate it entirely instead of, as it futilely hoped last March, trying to reduce it enough to stop most of the bleeding from the budget.

To eliminate it without resorting to "shock therapy," the subsidy should be reduced by a fixed amount each month so that it will be entirely eliminated by, say, next June. To attempt to eliminate it in one fell swoop has the potential for overthrowing the government, as the Egyptian government learned to its horror when it tried to raise the price of bread by a very large amount all at once at the behest of the international financial institutions. But a monthly salami increase in the price of fuel for vehicle owners, albeit painful, can be stomached with nothing worse than demonstrations and generalized griping.

WILL JOURDIN Ubud, Bali