PRESIDENT-elect Joko Widodo said he has not decided yet whether he would raise the price of subsidised fuel when he takes office next month.
According to Joko, his team was still weighing up the potential advantages and disadvantages if the price was increased.
“The impact is still being considered,” he said on Friday.
Although no conclusion has been made, Joko said he tended to agree with the idea of increasing the price so that the money used on fuel subsidies can be allocated for people to start up businesses in villages, for home industries, or to subsidise fertilizers for farmers and diesel fuel for fishermen.
“It’s better to reallocate the subsidy to productive businesses in the kampung, home industries, fertilisers for farmers, diesel fuel for fishermen, to buy machinery and so on,” he said.
Joko said he had asked President Susilo Bambang Yudhoyono in a two-hour closed-door meeting in Bali on Wednesday to ease the country’s widening current-account deficit by increasing the price of subsidised fuel but his request was rejected.
“Last night, I asked Susilo to ease the state budget deficit by increasing the fuel price,” Joko said on Thursday. “He replied that under the country’s current condition, it would not be possible to implement an increase.”
Coordinating Minister for the Economy Chairul Tanjung defended the president’s decision, saying Susilo did not want to transfer the burden onto the Indonesian people.
“The Susilo administration feels that the public has struggled enough; therefore we do not want to place a heavier burden on them,” he said, adding that the outgoing president has already increased the price of subsidised fuel several times in the past — by 140 per cent in 2005 and another 33 per cent last year.
Echoing the sentiment, Coordinating Political, Legal and Security Affairs Minister Djoko Suyanto said increasing the price of subsidised fuel when global oil prices were declining will not be an appropriate move.
Joko professed his disappointment, saying subsidies for the energy sector, as detailed in the 2015 state budget, would ultimately put a strain on the economy — especially when combined with the fairly large cache of funds that will be used to pay off a portion of Indonesia’s foreign debt.
However, Indonesian Democratic Party of Struggle (PDI-P) lawmaker Maruarar Sirait disagreed with the option to raise the price of subsidised fuel, saying there were still other measures the government could take to prevent the widening deficit.
He added that the deficit in the current account will be overcome if the government implements budget efficiency measures, prevents financial irregularities and boosts state income.