F

or years, I have been following the endless discussions in Indonesia about the price of fuel. I think it is time now for us to face facts. The price of crude oil and its derivatives are determined by the worldwide supply-and-demand situation.

Billions of people around the world are willing to pay the market price for fuel and many of them accept an even higher price because many countries add tax to this market price. Of course, some countries, which are net exporters of oil, make an exception. However, Indonesia is a net importer of oil products.

Therefore, most of the people living on our planet are paying at least the market price for fuel. In addition, with a few exceptions Indonesians always have to pay the market price for a product like a motorbike, car, food, TV, cell phone and so on.

Why can we not pay the market price for fuel? The most heart-rending argument is that we cannot burden the poor people by selling fuel at the market price.

With all humility, we have to accept that poor people do not have the money to buy a motorbike or even a car. We cannot call people who can effort to buy or finance a motorbike poor. I agree that many of our motorbike riders have to struggle to make ends meet but we cannot call them poor because billions of people around the world are struggling, even in Europe.

If someone can buy or finance a motorbike, they should be able to pay the market price for fuel. Of course, this argument is even more valid for the owner of a car. However, it might be an option to reduce the sales tax for buying a new motorbike temporally to reduce the burden of an increased fuel price for motorbike drivers only. In addition, everyone knows the subsidized fuel price benefits rich people more than the poor. I guess that no one will doubt that the monthly fuel consumption of a car is significantly higher than that of a motorbike.

If Thai, Vietnamese or Cambodians can pay the market price for fuel then we can do it too. We are not alone in our world, a world that is getting more and more competitive through beneficial globalization. We have to compete with our export products against the rest of the world and to stay competitive Indonesia needs to get better day by day.

If Indonesia loses its competiveness, it will fall behind and other countries will pass it by. No Indonesian wants this I presume. The government is spending billions of US dollars to subsidize the fuel price instead of spending the same amount of money for essential things such as infrastructure, education and health, which will allow Indonesians to get better and more competitive.

Everyone has to agree that Indonesia'€™s current infrastructure needs fast improvement and that this is more important than the potential fuel savings for each of us, because everyone needs good infrastructure. Everyone has to agree that an excellent and free education system for Indonesian youngsters is more important than the potential fuel savings for each of us because most of us have kids or will have kids. Everyone has to agree that our free health system can be improved and that this is more important than the potential fuel savings for each of us because everyone can get seriously sick and need help.

Therefore, let us increase the fuel price smoothly every month by Rp 250 (2 US cents) per liter. In approximately two years, we will have reached the market price, meaning the price that most of the people in our world are paying already or even more.

Roman Kuznik
Jakarta