Negative impacts of fuel hike

Negative impacts of fuel hike

From Media Indonesia

Since the New Order era, the increase of fuel prices has
always been presented as a reduction in the government's subsidy
to the people, as this phenomenon is closely associated with the
fluctuation of the oil price in the world market.

Over the years, this became something interesting to observe.
Why? Because each time the price of oil in the international
market went up, the oil price at home followed suit. But the
government, in the past, took this unpopular step to boost state
revenues.

Interestingly this time, the recent increase of fuel did not
at all have anything to do with the above-mentioned matters. So
how would the minister concerned explain the reason for the hike
to the media?

Since the very beginning we assumed that the oil price
increase at home was caused by a sharp contrast between domestic
and international prices: the oil price in the international
market was higher than that at home. Under such circumstances,
many people were tempted to smuggle oil out of the country. Only
a few people enjoyed the benefit of this, and the country
certainly suffered a loss.

The wide margin between domestic and international prices has
been used as a reason to legitimate the hike, adding that the
government is also trying to gradually reduce its oil subsidy to
the people.

It is important to note that these arguments can easily be
countered: the average income per capita of the people in many
other countries is well above that of Indonesians. To those in
other countries, such a hike should not be a problem at all, as
it would be commensurate with their income, but in contrast, it
would be a heavy burden for the people of Indonesia at large.

The most acceptable reason is probably that Indonesia still
needs massive funds for economic development, maintenance of
infrastructure, pensions for the retired and salaries of the
military and the police. And most important of all is the
servicing of domestic and foreign debt, both principal and
interest.

Last but not least, to eliminate the negative impact of the
fuel hike, the government must ensure that daily necessities are
readily available and the price of other amenities such as
electricity, telephone services, arts facilities, drinking water,
recreational facilities, electronic goods, transportation,
newspapers and stationery are not raised. The government must
address these issues, and if it can cope with these problems, the
people will better be able to appreciate the country's
predicament.

ISLAM ALWINI

Jakarta