The furel price rise dilemma

The furel price rise dilemma

From Koran Tempo

An Indonesian economic think tank has proposed that the government postpone its plan to raise fuel oil prices until 2006, because the increase would trigger price hikes as a psychological consequence of the public reaction.

The government indeed faces a dilemma in its fuel oil price policy-making. While state budget deficits necessitate subsidy reductions, the follow-on effects of a fuel price rise will also be grave.

Ordinary people will be considerably affected when producers raise their selling prices due to higher production costs. Increasing our oil output is not easy because it requires time- consuming surveys and exploration.

The government can raise its revenue by optimizing its non-tax income, which is estimated to be worth trillions of rupiah. Meanwhile, less urgent expenditure should be suspended and the wasting of budget funds prevented.

Indonesia's fuel prices are too low in comparison with those in neighboring countries and their increase is inevitable. The basic factors in our economic structure force us to increase them.

RIZA Jakarta