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