Transport subsidy in fiscal form

Transport subsidy in fiscal form

Rendi A. Witular, The Jakarta Post, Jakarta

The government says it is preparing a package of subsidies for
bus, taxi and train operators around the country to ensure that
ticket prices do not rise higher than 10 percent.

Minister of Transportation Hatta Radjasa said after Sunday's
Cabinet meeting that package would be in the form of subsidies on
the operational costs for transport providers.

"The subsidy will not be in the form of money disbursed
directly to drivers or other operators. It will be about reducing
the costs of their operational expenses," he told reporters at
the State Palace.

"The policy has been created so that drivers and ticketers do
not raise their fares by more than 10 percent because this would
spark public protest," he said.

Hatta said the package would include an exemption on import
duties for public vehicles and their spare parts. The government
would also divert more funds into public transportation
departments to cut down on extortion and other illegal fees.

"Fuel and illegal fees account about 40 percent of public
transport operators working costs. If we can curb extortion by
unscrupulous officials and thugs and make the operation more
efficient, the operators will not raise their fees as high," the
minister said.

He said central government had also ordered local
administrations to reduce fees for vehicle registration
procedures, renting terminals and car inspections in a bid to cut
the operational costs of operators.

Hatta said the ministry had ordered local administrations to
immediately issue an adjustment of fares in locally owned
transport services to prevent the protest.

"If local administrations cannot agree on the new fares, they
should issue temporary ones instead to prevent uncertainty," he
said.

The Jakarta chapter of the Organization of Land Transportation
Owners (Organda) had submitted its proposal to Jakarta
administration last week to increase fares more than 10 percent,
arguing that they had to "take into account other things, like
auto parts, lubricant consumption and the salaries of public
transportation crew".

Jakarta's City Transportation Council is scheduled to meet
Governor Sutiyoso on Monday to discuss on the proposed hike by at
least 13 percent.

Such move was different from the government's which had
already asked operators of public transportation services not to
increase their fees by more than 10 percent. However, many
drivers had ignored the plea and the reality for most public
transport user was a fare increase of between 20 percent and 35
percent.

The government hoped the package would ease the financial
burden on public transportation end users who are not yet
eligible for low-income assistance funds from the government.

The government increased fuel prices starting March 1 by an
average of 29 percent. The fuel subsidies were slashed to reduce
the burden on the state budget, encourage more efficient fuel use
and prevent fuel smuggling.

However, the transportation ministry's proposal to exempt
import duty could face a stumbling block from the finance
ministry.

Minister of Finance Yusuf Anwar said he was still studying the
proposal's impact on public revenue.

"The import duties exemption will automatically cause losses
to the state. We are still calculating the cost, whether the idea
is feasible for both the state and the public," he said.

Bus fares -- Page 8