House still opposes plan to increase price of subsidized fuel

Jakarta, NU Online
Amid widespread protests against the plan, discussions between the government and the House of Representatives on the increase in subsidized-fuel prices met a stumbling block on Thursday evening.

The House’s budget committee refused to make any decision on the proposal to raise subsidized fuel prices by Rp 1,500 per liter, to Rp 6,000, as lawmakers demanded that the government provide calculations of alternative measures such as reducing the hike by only Rp 1,000 per liter.

Responding to that request, the Finance Ministry’s acting chief of fiscal policy, Bambang Brodjonegoro, again outlined the reasons behind the government’s proposed Rp 1,500 per liter increase.

“The disparity between the economic [market] prices of subsidized fuels and their selling prices is now expanding. For diesel fuel, the economic price stands at Rp 9,390 and Premium Rp 9,018 — more than twice the selling prices,” he told the committee during a meeting in Jakarta.

“Why is it necessary to increase the prices? The law only allows us to have a financial deficit of 3 percent of our gross domestic product. If we don’t raise the prices, the deficit may exceed 3.5 percent this year,” Bambang argued.

Finance Minister Agus Martowardojo said that even if the government intensified efforts to generate more revenue and improved efficiency, the deficit might still hit 2.6 percent, which would be very dangerous for the government because of the 3 percent deficit allowed under law, with 0.5 percent being the portion set aside for the regional budgets’ deficit.

Fuel subsidies were mostly enjoyed by the upper-middle classes of society, not poor people, Bambang said.

According to the 2011 National Socioeconomic Survey (Susenas), of the 37.7 million families who have motorcycles, just 2.6 million of them are classified as “poor”. From the 4.6 million families owning cars, only 25,000 of them are poor.

“The data shows that the subsidies aren’t being enjoyed by the intended targets,” Bambang said as quoted by The Jakarta Post.

The real cost of the fuel subsidy always surpassed the budget amount, he said. In 2010, the subsidy cost Rp 82.4 trillion, from a target of Rp 68.7 trillion. In 2011, the realization was Rp 165.2 trillion, from a target of Rp 96 trillion.

“This year, if we do nothing, the fuel subsidy may reach more than Rp 203 trillion,” Bambang said.

One budget committee member, the Golkar Party’s Satya W. Yudha, argued that to convince lawmakers of the benefits of the hike, the government had to provide a clear proposal on how to use the money saved from the increase in subsidized fuel prices.

“The government says it can save up to Rp 30.6 trillion if the prices are increased by Rp 1,500. We want to know how it will use the money. We want most of the money allocated to build infrastructure,” he told reporters after the meeting.

“The portion for infrastructure must be larger than that for the direct cash-assistance [known as BLT] given to poor people. A clear proposal is important because not all factions in the House can accept the price increase.”

The discussion between the government and the committee will continue Monday. (dar)