Government Must Promptly Reform Fuel Subsidy Distribution Model to Curb Fiscal Burden

The government is assessed as needing to promptly rectify the distribution pattern of fuel (BBM) subsidies to suppress the surge in the energy budget burden amid global oil price pressures. Executive Director of CORE Indonesia, Muhammad Faisal, views that one crucial step is to tighten restrictions on the use of subsidised BBM to make it more targeted. “To suppress consumption and control the energy subsidy budget, restrictions on the use of subsidised BBM need to be tightened,” said Faisal when contacted on Friday (27/3/2026). Currently, the government has implemented rules for the use of subsidised BBM such as Pertalite and diesel for four-wheeled vehicles with engine capacities under 1,400 cc and two-wheeled vehicles under 250 cc. However, according to Faisal, this policy still needs refinement. He assesses that the limit could be tightened further, especially for four-wheeled vehicles, so that subsidised BBM consumption is more controlled and not enjoyed by unworthy groups. “In the future, this limit could be lowered again, particularly for four-wheeled vehicles, so that the use of subsidised BBM is more economical and targeted,” he explained. He emphasised that the energy subsidy control strategy needs to be carried out comprehensively, encompassing budget efficiency, refocusing state expenditure, tightening subsidised BBM distribution, to controlling public mobility. With this integrated approach, the government is expected to maintain fiscal stability without having to raise the price of subsidised BBM, while ensuring that subsidies are truly enjoyed by groups in need.