REMOVAL OF FUEL SUBSIDY NEEDS CAREFUL CONSIDERATION

By Andi Abdussalam

Jakarta, Dec 21 (ANTARA) - Coordinating Minister for Economic Affairs Hatta Rajasa has stated that the removal of fuel oil subsidy needs careful consideration, particularly for the sake of the nation's poor, who would have to be provided with a substitute for the fuel.          The idea to remove fuel oil subsidy, which has been a burden on the state budget, first came from the Indonesian Chamber of Commerce and Industry (Kadin) and the Jakarta deputy governor.          The Kadin has advised the government to phase out subsidies for fuel oils so the state funds could be used for development of infrastructure in various provinces across the country.          "Kadin has asked the government to remove fuel oil subsidy because it is being enjoyed not only by the poor people but also by the rich," Kadin chairman Suryo Bambang said last week.            He said the fuel subsidy must be lifted and "should be returned to the poor people in other forms".          "About Rp5 trillion of the subsidy should be given to provinces to build regional infrastructural facilities," Suryo stated.          The subsidy funds could also be used for education and for assisting local businesses, particularly small and medium enterprises.          Meanwhile, Jakarta deputy governor Basuki Tjahaja Purnama also said he would request the President to lift fuel oil subsidies in Jakarta.          "Such a move would encourage private car users to use public transportation," he explained.          "We hope commuters will later choose whether they will use busways or regular buses. We will request the President to lift the subsidy on premium gasoline," Basuki stated.          At present, subsidized fuel consumption has been exceeding the quota set in the state budget. The consumption of subsidized premium gasoline and diesel oil this year has reached 46 million kilolitres, exceeding the initial quota of 40 million kilolitres.          For 2013, the government has set a quota of 46 million kilolitres, but national consumption is predicted to exceed the quota unless steps are taken to control consumption. National consumption is estimated to reach 48 million kilolitres.          "In the 2013 state budget, total fuel oil subsidy was set at Rp193.8 trillion, consisting of Rp193.3 trillion in current subsidy and the reduction of subsidy in 2011 amounting to Rp3.5 trillion," Basuki noted.          Subsidies for fuel oils and biofuels amounted to Rp140.46 trillion.          Finance Minister Agus Martowardojo stated that the 2013 State Budget could increase by Rp70 trillion if consumption of subsidized fuel oils in 2013 increased from 46 million kilolitres to 48 million kilolitres.          "If subsidized fuel oil consumption in 2013 is not controlled, it could reach 48 million kilolitres and that will increase the budget by Rp70 trillion," the minister said here over the weekend.          "This estimate will revised if the Indonesian Crude Price (ICP), the value of the rupiah currency exchange rate and state revenues change," he pointed out.          The minister, however, said the state budget deficit would need to be controlled at 1.64 percent.          "We are facing a challenge with additional state expenditure. We need to respond to this by optimizing the efforts to increase tax and non-tax revenues (PNBP)," he added.          Meanwhile, Treasury Director General Herry Purnomo said the state budget would swell if the subsidized fuel quota was increased by 2 million kilolitres.          Acting Chief of the Finance Ministry¿s Fiscal Policy Affairs Bambang Brodjonegoro supported the Jakarta deputy governor's decision to asked President Yudhoyono to lift fuel oil subsidies in Jakarta.         "It is a good thing if the proposal comes from the regional government of Jakarta. It would be helpful if fuel subsidy in Jakarta is removed, as Jakarta, with its satellite towns of Bekasi, Bogor, Depok and Tangerang, is the most critical area," he said.          Brodjonegoro expressed hope that the regional government of Jakarta would cooperate with state-owned oil company Pertamina to realize the plan.     He said the plan was in line with the central government's plan to controlling subsidized fuel oil consumption.          "So, the plan to lift the subsidy will be supported by the Ministry of Finance. It is a top priority to control subsidized fuel oil consumption," Brodjonegoro stated.          In response to the idea, Hatta said the plan to remove the subsidy should be implemented carefully ¿for the sake of those who deserve the subsidy¿.          "We should think about the poor Jakarta residents. What will they do if the fuel oil subsidy in Jakarta is lifted?" Hatta asked on the sidelines of a national summit on climate change on Thursday.          Cited an example of the fishermen in Marunda, North Jakarta, he said: "We should think of the fate of Marunda fishermen.¿     The regional government of Jakarta has proposed that the subsidy for premium gasoline should be removed when mass transportation systems such as Bus Rapid Transit (BRT) and Mass Rapid Transit (MRT) systems became operational.***2*** (T.A014/INE   ) (T.A014/A/KR-BSR/A/A014) 21-12-2012 21:4