MPR Deputy Speaker Says 63% of Indonesia's Subsidies Are Misdirected
Deputy Speaker of the People’s Consultative Assembly (MPR) Eddy Soeparno has asserted that state subsidies for energy products have been widely misdirected and enjoyed by ineligible recipients. He noted that 63% of total annual energy subsidies miss their intended target, citing data from the National Energy Council (DEN). He stressed that the government must immediately improve its subsidy recipient data to ensure better targeting.
He argued that savings from this sector are crucial to be redirected towards infrastructure development and other productive economic sectors to achieve economic growth targets. "According to the National Energy Council, 63% of our energy subsidies are misdirected. How much are the annual energy subsidies and compensation? Rp 390 trillion," he stated at a CNBC Indonesia Coffee Morning event, quoted on Friday (23/7/2026).
Eddy detailed a significant price disparity between the selling price to the public and the economic price in the market. For subsidised diesel fuel, for example, the selling price is set at Rp 6,800 per litre, whereas the actual production cost has reached Rp 12,000. Similarly, for subsidised Pertalite petrol, the real price is Rp 16,100 per litre, but it is sold domestically for Rp 10,000.
"We buy Pertalite for Rp 10,000 everywhere. What is its economic value? Rp 16,100. So you can imagine, for a 3-kilogram LPG canister, the price is around Rp 20,000 to Rp 21,000. Its economic value is Rp 56,000," he explained. The same condition applies to 3-kilogram LPG canisters, which receive a subsidy of approximately Rp 36,000 per canister from the government. High dependence on imports, where 80% of LPG needs are sourced from abroad, causes the country’s foreign exchange expenditure to swell annually.
"Our need is 8 million kilolitres per year. 80% is imported. After we import it, spending foreign exchange, we then provide a subsidy. The subsidy is misdirected," he asserted. Eddy therefore emphasised the need for right sizing and right targeting measures so that the Rp 390 trillion allocation for subsidies and compensation is not enjoyed by ineligible groups. He believes that savings from properly targeted subsidies can be allocated to strengthen regional transfer funds.
"So you can imagine how much savings we could make if we implement right sizing and right targeting of our subsidies. These savings could then be used for budget allocations in other economic development sectors," he concluded.