Govt aims to redirect oil subsidy to the poor

Govt aims to redirect oil subsidy to the poor

The Jakarta Post, Jakarta

The government claims the massive fuel subsidy benefits the
rich more than the poor, and that by cutting the subsidy and
raising fuel prices it can redirect the money into programs that
will benefit those most in need.

As part of its campaign to win the hearts and minds of the
people, the government promised on Monday night to allocate Rp
10.5 trillion of the Rp 20.3 trillion saved by cutting the fuel
subsidy to finance a number of programs targeted directly at the
poor.

This Rp 10.5 trillion is in addition to the Rp 7.3 trillion
already budgeted for programs to assist low-income families and
individuals.

The majority of this Rp 17.8 trillion will go toward a
scholarship program, for the purchase of subsidized rice for the
poor, rural infrastructure projects and health programs (see
table below).

But the skeptics remain unmoved. Amien Rais, leader of the
National Mandate Party (PAN), last week questioned which poor
people the government was targeting.

Some critics claim the government lacks accurate statistics on
the number of poor in the country, who they are and where they
live.

The government relies solely on data supplied by the Central
Statistics Agency. For its subsidized rice program, for example,
the government is relying on the same data used by the previous
administration for a similar program.

Even if the government had accurate data, some critics still
doubt the money and assistance would reach those it was intended
for.

Indonesian Chamber of Commerce and Industry chairman M.S.
Hidayat said during a discussion over the weekend the business
community was willing to shoulder the burden of the fuel price
increase as long as the money saved reached the poor.

Responding to these concerns, Coordinating Minister for the
Economy Aburizal Bakrie said the government had included so-
called safeguard funding in the programs to guarantee the
assistance reached its intended targets.

For example, for inexpensive rice meant to be sold for Rp
1,000 per kilogram, the safeguard funding will ensure the rice is
never sold for more than this set price.

Such safeguard funding will normally go to people at the
village level to cover the cost of transporting the rice to the
poor, or to non-governmental organizations helping to monitor the
distribution of the rice.

According to an informed source, however, this safeguard
funding often finds its way to unintended recipients --
legislators -- to make sure they do not block the assistance
programs.

Assistance programs

Scholarships for 9.6 million students -- Rp 5.64 trillion
Inexpensive rice for 8.6 million people -- Rp 5.44 trillion
Infrastructure development in 26,737 villages -- Rp 3 trillion
Health services for 36.1 million people -- Rp 2.17 trillion
Social services -- Rp 0.65 trillion
Construction of 225,000 low-cost houses -- Rp 0.6 trillion
Subsidy for microcredit interest -- Rp 0.2 trillion
Subsidy for family planning programs -- Rp 0.1 trillion
Total -- Rp 17.8 trillion