Indonesia trying to confront runaway fuel subsidy costs

Article by Christian A., on April 1, 2013

Many Indonesians are afraid that they will lose a subsidy from the government that makes them benefit from having one of the most affordable fuel prices in Asia. Once again, its government is trying to prevent fuel subsidy costs from rising. Its attempts account for over 30% of state spending. They’re also using up funds that should have gone to boosting infrastructure. It’s expected that this week, President Susilo Bambang Yudhoyono's administration will unveil new measures to limit the use of subsidized fuel. But as elections are approaching, he certainly won’t want to relive memories of protests in 2005 and 2008 over fuel price increases.

It’s believed that he will have to give in to what the masses want and not discontinue subsidies. The government could ban private cars from using subsidized fuel in Jakarta and other big cities. Critics said that it will be difficult to implement and won’t do much to relieve the huge load on the national budget.

In 2012, the bill for subsidies amounted to $22 billion, which is almost 4% of the total economic output. When interviewed by Reuters, Suryo Bambang Sulisto, chairman of Indonesia's influential chamber of commerce (Kadin), said that any plan that doesn’t get rid of fuel subsidies altogether will not be effective. He said that subsidies have to be stopped since they create a false economy that has resulted to widespread corruption, smuggling, and fund misallocation.

Topics: indonesia

If you liked the article, share on:

Pin It

Comments

Recommended

It’s quite safe to say that this generation marks the rise of the electric cars. For the past few years, automakers have been very busy trying to find the perfect...
by - March 28, 2017
Want to go for a sportier look, but don’t have enough cash to burn? Good news for future Ford Edge buyers, as the 2018 model year will have an optional...
by - March 28, 2017
Audi refreshes its portfolio as its go-faster division officially announces the release of six new RS models by the end of 2018. That’s quite a huge number of cars to...
by - March 28, 2017
Has Toyota started the production of a new electric supercharger? Well, a patent that was recently published indicated that they might have. And this electric supercharger looks more durable and...
by - March 27, 2017
The Tesla Model S has finally arrived in South Korean soil and is now available for test drive. But, there’s a catch. You’ll have to wait several months if you...
by - March 27, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries