Was the govt's policy worth it?

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