Was the govt's policy worth it?

Indonesia is in the middle of a crisis, yet no one seems to panic. How come?

The facts were clear, the government knew about it. When cutting the fuel subsidy Minister of Finance Jusuf Anwar as well as President Susilo Bambang Yudhoyono knew about the advantages and disadvantages of the cut, that's why I would like to ask: Was it worth it?

The gains from the government side of removing subsidies are manifold, clearly the government saves money by doing so, last year it spent around Rp 120 trillion on fuel only. Another reason is that only 30 percent of the subsidy actually went to those it was supposed to help: The poor.

Rich people with vehicles gained the most from the fuel subsidy. At the same time as removing the subsidy, the government created aid programs such as free medical checkups, and put money into the poorest villages. Another good thing they did was to distribute a Lebaran gift of Rp 300,000 for the three following months. This might also be a political ploy to prevent the people from rioting due to the usual increase in inflation in addition to the inflation occurring due to the fuel price increase.

How to measure the cost of a poor, bright child not being able to go to school? Around two million children are not able to attend elementary school anymore.

What should Indonesia do? Reinstall the subsidy? No, there are several other options that would be beneficial in the short term and long term. Indonesia has already taken a correct step to attract foreign investors by creating a more business friendly environment and in getting rid of corruptions.

It still has a long way to go. A suggestion for increasing the government's revenue would be to create a more sufficient tax system. This could be done by reducing the tax rate, so companies would gain less benefit from cheating on tax payment, as well as by raising the penalties for those practicing tax fraud.

KNUT J. MO, Surabaya