Urban bias policy
Urban bias policy
The government's decision to postpone fuel price hikes,
originally planned for this month, highlights the exceptionally
large political leverage that the minority urban population in
this country has. It is evidence of the strong urban bias in the
present system of political representation and government. It is
a system in which rural folks, although making up over half of
the population, are not as well represented as they should be.
This strong urban bias is an aspect of the government's cheap
oil policies that is rarely discussed objectively as politicians,
activists, students and the media busied themselves opposing the
planned increases. Yet, here is a government program whose
benefit is enjoyed mostly by a small minority of the population,
but whose burden, estimated at Rp 22.4 trillion ($2.9 billion)
between April and December even with the price increase, is
equally borne by everyone in the country.
The oil subsidy benefits mainly those who travel frequently,
including owners of private vehicles. The more cars you have and
the more often you drive, the more benefit you reap from the
system, and the more burden you impose on the rest of society.
The rural population has the benefit of cheap kerosene, their
main cooking fuel. But the biggest beneficiaries of this cheap
oil policy are people in urban areas, mainly private car owners
and to a lesser extent public transportation users.
Yet, someone must ultimately bear the heavy cost of the
subsidy. It sure is not the International Monetary Fund (IMF) --
often depicted as the evil force behind the government's decision
to hike fuel prices -- or any other major foreign lender. Even if
the money to pay for this program comes from foreign loans -- a
probable scenario since the government is broke -- it is the
entire nation who will have to pay this, sooner or later. Surely
there are much wiser ways of spending the billions of dollars
which the nation's wealthy squanders each year on oil subsidies.
A common fallacy found among people who object to the planned
fuel price increases is to blame the IMF for putting pressure on
the Indonesian government. Given Indonesia's financial
predicament, the government is often portrayed as a weak party
with no option but to accept IMF's terms in return for the
massive bail out program. While the IMF may indeed have required
the government to phase out the fuel subsidies, the program makes
economical sense. It makes better use of Indonesia's precious oil
resources, and addresses the rural-urban imbalance. Raising fuel
prices is a course that the government must pursue even without
the IMF prodding.
Consciously or not, politicians, non-governmental
organizations, students who took to the streets, and the media
are protecting the interests of the wealthy few by speaking out
against the fuel price hikes. The IMF -- even if we assume they
have dictated the policy -- has actually a greater legitimate
claim that these people do of acting on behalf of the larger
population who live in the countryside.
Other instances where urban bias is most apparent is in the
government's policy of keeping rice prices cheap to protect urban
consumers. The urban population have also enjoyed far greater
access to government-provided basic facilities, including
education and health, not to mention infrastructures built by
taxpayers money. All of this may be acceptable since the urban
population is politically better organized and have the advantage
of proximity to the centers of power. But this is an unhealthy
situation. If tolerated it will only widen the gap between the
urban and rural populations. Whatever the outcome of the current
debate about phasing out oil subsidies, we need to redress the
heavy urban bias in our political system.