March 30, p1

The government has increased the price of subsidized gasoline again in line with its fixed-subsidy plan, but the price is significantly lower than its actual market price, a policy that may eventually force the government to spend on fuel subsidies again.

On Saturday, the price for Premium (gasoline) and Solar (diesel) fuels increased to Rp 7,400 (57 US cents) per liter and Rp 6,900 per liter, respectively, both increasing Rp 500 per liter from previous prices.

However, the new prices were set well below market price, as the sharp depreciation of the rupiah and the increase in oil prices, stemming from recent geopolitical tension in Middle Eastern countries, drove up the cost of fuel imports.

Your comments:

The government increased the price to Rp 7,400, Rp 500 higher than the previous price. It'€™s a good policy.

Handiman

We knew that President Joko '€œJokowi'€ Widodo had no political muscle whatsoever. His leadership is based solely on his popularity.

We took the gamble and chose him anyway. Now, stick with it and support him to see this through.

Sudarshana Chakra

Almost every economist in the galaxy has been telling Indonesia that its fuel subsidies have to go.

Unfortunately, with President Jokowi'€™s popularity now so low and probably likely to continue to fall, he will not be able to execute another price increase in the foreseeable future, maybe even for the remainder of his term.

I actually still believe he is a decent human being and smart enough to know what is needed, but he clearly lacks whatever it takes to get things done at the highest level and ends up stuck in these clumsy compromises.

He shouldn'€™t have lowered the prices again after the initial rise (he had already copped the political fallout, so he had nothing more to lose), then in increments slowly pushed the price up until it was at least at cost. Only then should he let it float. Pretty obvious, I would have thought.

Loro Blonyo

Why isn'€™t the government heeding the advice of its oil and gas reform team head, Faisal Basri, to abolish Premium. Faisal has said that no country in Southeast Asia uses RON 88. Indonesia buys oil with specifications of RON 92.

There is no benefit for Indonesia at all, so that'€™s why Indonesia needs to stop importing RON 88. With no RON 88 in the market, the government will be no longer face this issue and then the subsidies can be allocated to other important and useful sectors, such as education and health.

Wijaya Irvan

Jokowi should have gotten rid of the subsidy and let market prices determine the price at the pump.

Lasem

The reference to the Constitution is amusing. That document makes no mention of fuel prices, so it is hard to see how it can be used to justify the government'€™s fairly predictable backing away from its policy of adjusting fuel prices in line with movements in the world price of oil.

Article 33 does require the government to manage natural resources, including oil, for maximum benefit to the Indonesian people. This requires that oil should not be sold off (in effect) at less than its true world market value.

Otherwise, the benefits go disproportionately to those who consume the most (the middle class and the rich), at the expense of those who consume little (the poor).

Previously, the Jokowi government could boast of a single good economic policy reform. Now he seems to be down to zero.

Ross McLe

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