Jakarta, Nov 17 (Antara) - As it might affect 29 million poor people
and 70 million others who are vulnerable to poverty, the government's
plan to raise the price of subsidized fuels has received various
suggestions from the public.
Many quarters have predicted that raising the price of fuel, which is
part of the government's efforts to lift fuel subsidy, will boost
inflation rate and, in turn, affect the purchasing power of people in
the lower-income bracket and those categorized as nearly poor.
While some observers suggested that the government should postpone the
plan until January 2015, others asked it not to hike the price of fuel
for motorcycles. Some even suggested that the plan be dropped
altogether.
Economic analyst Iman Sugema of the Bogor-based Institute of
Agriculture (IPB) said that the government does not necessarily need to
revoke fuel subsidy for motorcycles but should do so only for private-
and government-owned cars.
Sugema noted that the government could adopt one of the four scenarios,
or schemes, to raise subsidized fuel prices, particularly that of
subsidized premium gasoline that is now sold at Rp6,500 per liter.
"One of the four scenarios is that the government raises the price by
Rp1,000 per liter, with an estimated 0.21 percent increase in poverty
rate and a 0.94 percent increase in inflation rate," he explained.
The government could also choose the second option, which is raising
the price by Rp2,000 per liter with an estimated poverty rate increase
of 0.38 percent and inflation rate increase of 1.89 percent.
The third option is that the price be hiked by Rp3,000 per liter, with
an expected poverty rate rise of 0.49 percent and that of inflation rate
by 2.83 percent.
That the government withdraws fuel subsidy for private- and
government-owned cars with the subsidy for motorcycles kept untouched is
the fourth option. The subsidy can then be diverted to the sectors of
infrastructure, education, health and agriculture.
The fourth scheme is expected to raise poverty and inflation rates by 0.01 and 0.91 percent, respectively.
The economic analyst also pointed out that subsidized fuel consumption
by motorcycles was only about 19.5 percent of the total, while cars
consumed 75.6 percent of subsidized automotive diesel oil and 89.8
percent of gasoline.
By adopting the fourth scenario, the government can save on 68.8
percent of subsidized fuel from private cars, he explained.
In
addition, Rizal E Halim, a researcher of the Faculty of Economics of
the University of Indonesia, stated that increasing the cost of
subsidized fuels would not be effective now because the fiscal year is
about to end. It would be better for the government to increase it early
in 2015 and allow its economic viability to be achieved in 2016.
Halim
noted that the plan to increase subsidized fuel oil prices should be
allowed to gain public popularity first because some 29 million poor
people and 70 million others who are vulnerable to poverty will be
affected by it.
These groups of people are quite sensitive to changes in the prices of goods.
The
government should understand the real context and substance of energy
subsidy reforms. It is a political commitment, not a political
commodity, in the interest of the nation, the researcher added.
Halim further argued that raising fuel oil prices right now would not
be the right move to undertake because the fiscal year will end in less
than two months. Current political and social realities were not
conducive to the plan, as well as the fact that the world crude price
was on the downward trend.
Over the weekend, the price of world crude hit a four-year low, recorded at less than US$80 per barrel.
"The policy to increase subsidized fuel prices should not be
implemented if it is being done only to meet a political commitment.
Fuel subsidy reform policies need mature planning and a sustainable
program; they should not be based on a partial decision, let alone an
incidental one," he remarked.
Besides, the availability of basic necessities still faces serious
problems, including ones related to cartel and quota.
The Central Board of Statistics (BPS) pointed out that if the cost of
subsidized fuel is raised by about Rp2,000 to Rp3,000 per liter, it will
contribute 3.5 percent to the inflation rate, which would mean that
inflation rate at the end of the year will be more than 8 percent.
This high inflation rate will affect people's purchasing power.
Sociologist Nia Elvina of the National University (Unas) opined that
President Joko Widodo (Jokowi) should have the guts and confidence to
drop the plan to increase subsidized fuel prices.
She further suggested that the government should review its policy on the fuel price hike.
"This
(the review) is necessary because the impact of raising the price of
fuel will worsen the lives of people in the lower classes. In other
words, they will be further trapped in poverty," she noted.
The
sociologist asked the government to observe the current realities where
experts estimate that inflation rate will rise to an extraordinary
level.
"I
think the government should understand the psychological conditions of
the people," Elvina, who is also the secretary of the psychology
development at Unas, said.
Challenging President Jokowi to abandon the plan to hike fuel oil
prices, she stated that he should have the guts and confidence to drop
the plan altogether.
"It would be better if he finds breakthroughs in lifting the standards
of living of people in the lower classes in Indonesia without hiking the
prices of subsidized fuels," Elvina remarked.
She added that if Jokowi wanted to win the people's trust and meet
their expectations, he should have the courage to cancel his plan and
find alternatives instead.
"If we compare the arguments of sociologists from the health
perspective, I think raising the cost of subsidized fuel is akin to
efforts put in to fight drug abuse," she noted.
"Drug
addicts are the ones who have always been fought against, not the drug
dealers or producers who are the sources of the problem. This approach
also applies to the policy of raising subsidized fuel oil prices,"
Elvina explained.
This
means that it is not the price that should always be hiked, with people
from the lower strata of society being victimized, but how the
government handles and reviews its energy-related policies, which is
prone to corruption, nepotism and collusion. How the government handles
the development of alternative energies counts.
"I think the root of the problem is in the policy, not merely in our
energy sources. Now is the right time for the new Jokowi-Jusuf Kalla
government to prove its commitment to people's interests," she remarked.
She noted that people were, in fact, convinced that the new government would transform their lives for the better.
"But if the government raises the prices of fuel oil, it will dash
their hopes. As a consequence, the government will no longer have the
support of most Indonesians in the middle and lower classes," she
pointed out.
At the same time, the move will also lead people to believe that the
Indonesian Democratic Party of Struggle, which supported the
Jokowi-Jusuf Kalla government, was being hypocritical when it rejected
the previous government's plan to increase subsidized fuel prices.
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(T.A014/INE/S012)
EDITED BY INE
(T.A014/A/BESSR/Suharto) 17-11-2014 21:21:3 |
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