How Fuel Subsidies Impact Public Transport Quality
The Indonesian Transportation Community Advisory Council (MTI) Central, Djoko Setijowarno, believes that the state budget (APBN) is still overshadowed by unresolved energy financing issues, despite the recent price increase for Pertamax. One of the items deemed to burden the national fiscal position is fuel subsidies, which are often misdirected.
According to Djoko, the scale of fuel subsidies fluctuates annually, influenced by three main factors: the Indonesian Crude Price (ICP), the exchange rate of the Rupiah against the US Dollar, and national consumption volumes.
He noted that fuel subsidy realisation surged to Rp 551.2 trillion in 2022, before dropping to Rp 375 trillion in 2023 and shrinking to Rp 113.3 trillion in 2024. However, for 2025, realisation is projected to rise again to Rp 394.3 trillion, before being set at Rp 210.1 trillion in the 2026 State Budget.
Djoko stated that the transport sector contributes approximately 40 per cent of total national fuel consumption. However, based on data from the Ministry of Energy and Mineral Resources (ESDM), around 93 per cent of subsidised fuel consumption is enjoyed by private vehicle owners, including both two-wheelers and four-wheelers.
In contrast, the portion of subsidised fuel consumption for freight transport is only about 4 per cent, while passenger public transport accounts for just 3 per cent. This condition, according to Djoko, indicates that the benefits of fuel subsidies are still largely enjoyed by more affluent groups of society.
Consequently, he is pushing for the accelerated development of public transport systems in regional areas as a more strategic solution than maintaining the current energy subsidy pattern. Such a move is considered aligned with the government’s target to transform Indonesia into a developed nation by 2045, where an indicator is the availability of adequate public transport systems.
Djoko assessed that only about 19 years remain until 2045, meaning public transport improvements must be undertaken immediately. He noted that the experience of developing Transjakarta over the last two decades could serve as a reference for other regions.
However, the state of public transport in regional areas remains lagging. Out of 514 local governments in Indonesia, Djoko stated that only 45 regions, or approximately 9 per cent, have modernised their public transport systems.
Furthermore, some of these regions still rely on support from the state budget. Currently, only two regions have public transport services that still receive central government funding: Balikpapan through Balikpapan City Trans and Manado through Trans Manado.
Djoko suggested that the government should reallocate part of the electric vehicle incentive budget to support the development of regional public transport. In his view, the subsidy of Rp 5 million per electric motorcycle unit would provide greater benefits if used to encourage local governments to improve public transport services.
If electric vehicle incentives are to continue, he suggested that the programme should be prioritised for communities in small islands and frontier, outermost, and remote (3TP) areas that face limited fuel supplies due to geographical constraints.
Djoko cited Asmat Regency, which has utilised electric motorcycles since 2007 as a local transport solution amidst limited fuel access. He believes that improving public transport would provide broader benefits for the public. The government could also implement low fares or even free services for students, workers, teachers, the elderly, people with disabilities, and low-income groups.
Beyond increasing fiscal efficiency, Djoko believes that a good public transport system can reduce social risks, improve road safety, encourage equitable development and regional connectivity, and provide benefits for the environment and urban planning.