JP/12/Budget
JP/12/Budget
House factions support govt plan to cut fuel subsidy
JAKARTA (JP): Major factions at the House of Representatives
supported the government's plan to further reduce the fuel
subsidy next year, saying it would help ease pressure on the 2002
state budget and reduce the risk of smuggling fuel abroad.
However, they demanded the government come up with an
effective compensation program to help protect the poor from the
impact of the fuel price increase, noting that in past cases most
of the money had not reached desired targets.
The House started on Wednesday the deliberation process of the
2002 state budget draft at a plenary session, which was attended
by Ministry of Finance Boediono.
Under the draft unveiled last week by President Megawati
Soekarnoputri, the government planned to continue to cut the fuel
subsidy to Rp 32.29 trillion (about US$3.5 billion) or 1.9
percent of the Gross Domestic Product (GDP) next year from Rp
53.8 trillion this year.
As a consequence, the government may have to raise fuel prices
by an average of 30 percent, possibly starting next year.
The fuel subsidy has been a politically sensitive issue in the
country. The previous administration of former president
Abdurrahman Wahid went through a tough time convincing
legislators to approve the fuel subsidy reduction program.
The state budget draft will still have to be debated by the
House's special budget committee.
The government is determined to completely eliminate the fuel
subsidy in 2004.
Poltak Sitorus, a legislator from the Indonesian Democratic
Party of Struggle (PDI Perjuangan) faction, said, "With the
termination of the fuel subsidy in 2004, the faction believes
that the faster it is done the better as long as the negative
aspects can be handled properly."
He explained that the fuel increase would encourage energy
saving, increase efficiency in resource allocation and prevent
smuggling.
However, the government should also be able to prove that
compensation was given to those in need and that it should
carefully review the planning, realization and control of the
compensation scheme, Poltak said, reading the faction's general
overview of the 2002 state budget draft.
Simon Patrice Morin of the Golkar faction concurred with the
views of PDI Perjuangan, saying that reducing the fuel subsidy
was understandable to make room for a larger budget on
development.
However, the faction proposed that by increasing fuel prices,
the government should carefully calculate a more rational fuel
price, including for imported fuel, he said.
The government should give a detailed outline on how ready it
is in monitoring the distribution of fuel to reduce smuggling,
monitoring the selling price and domestic consumption rate to
avoid price manipulation in isolated areas, and to prevent
overproduction or importing too much fuel, Simon said.
"We also want the government to explain about its zero fuel
subsidy planned for 2004, and the success of its compensation
scheme and social welfare program aimed at the poor," he added.
Simon said that the Golkar faction suggested the government
design a comprehensive program to improve welfare, education and
public health to be financed by the cut fuel subsidy.
A legislator from the United Development Party (PPP) faction,
Sofyan Usman, said the subsidy cut should be followed by steps in
ensuring efficiency in production and distribution, and the
government's serious attempt to curb collusion, corruption and
nepotistic practices in state-owned oil and gas company
Pertamina.
Elsewhere, House factions also questioned the government's
2002 deficit estimate of Rp 43 trillion or 2.5 percent of GDP,
arguing that it was too optimistic.
Ida Fauziah of the National Awakening Party (PKB) faction said
to reach a deficit of 2.5 percent of GDP, Indonesia's economy
must grow by more than 10 percent, which is impossible given the
current circumstances.(tnt)