MTI: Redirecting Fuel Subsidies to Public Transport Would Yield Broader Benefits
The Indonesian Transportation Society (MTI) has proposed that the government begin diverting a portion of fuel subsidies towards the development of public transport. According to MTI, the benefits of the budget would be felt more broadly if used to improve public transport services rather than propping up fuel consumption.
MTI Central Advisory Board member Djoko Setijowarno stated that the amount of fuel subsidies fluctuates each year and constitutes a component of energy spending that significantly burdens the State Budget (APBN).
“The amount of fuel subsidies always fluctuates every year,” Djoko said in a written statement in Jakarta on Monday (15/6/2026).
According to Djoko, the size of energy subsidies is influenced by the Indonesian Crude Price (ICP), the rupiah exchange rate against the US dollar, and the level of public consumption. Realised fuel subsidies were recorded at Rp551.2 trillion in 2022, then fell to Rp375 trillion in 2023 and Rp113.3 trillion in 2024. However, the figure rose again to Rp394.3 trillion in 2025 and has been set at Rp210.1 trillion for 2026.
Djoko revealed that the transport sector absorbs around 40 per cent of national fuel consumption. Yet, based on data from the Ministry of Energy and Mineral Resources (ESDM), 93 per cent of subsidised fuel is enjoyed by owners of private two-wheeled and four-wheeled vehicles.
“Meanwhile, the remainder is enjoyed by freight transport at four per cent and public passenger transport at three per cent,” Djoko said.
For this reason, MTI is urging the government to accelerate the development and improvement of public transport across the regions. According to Djoko, a good public transport system is an important indicator of a developed country and must be prepared now to support the Indonesia Emas 2045 target.
“Therefore, a special programme to accelerate the improvement of public transport in the regions must be implemented from now on,” he stated.
Djoko noted that the development of public transport in the regions remains limited. Out of 514 local governments in Indonesia, only around 45 regions, or nine per cent, have begun developing modern public transport services.
“Tragically, of that small number, only a fraction are self-sufficient. Currently, only two local governments still depend on APBN funds for operations, namely the City of Balikpapan through Balikpapan City Trans and the City of Manado with Trans Manado,” he said.
According to Djoko, a portion of the budget currently used for electric vehicle subsidies could also be redirected to help local governments build public transport. If electric vehicle incentives are to be maintained, he assessed that they should be prioritised for archipelagic regions and underdeveloped, frontier, outermost, and border areas (3TP) that face constraints in fuel supply.
“This subsidy should be prioritised for communities on small islands and in 3TP areas that face geographical constraints in fuel supply,” he said.
Djoko cited the use of electric vehicles in Asmat Regency as an example of how they can help community mobility amid limited energy access. That experience shows that subsidy policies can be designed to better suit the needs of each region.
Beyond improving mobility, public transport is also seen as a way to help reduce the cost of living. The government has room to provide cheap or even free fares for certain groups such as school pupils, university students, labourers, teachers, the elderly, persons with disabilities, and low-income communities.
“In addition to creating fiscal and state budget efficiency, a good transport system also serves as a form of social risk mitigation and has a positive impact on environmental improvement and urban spatial planning,” Djoko concluded.