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Govt cuts fertilizer subsidies, rolls out wage subsidies
The programs were launched as the government braces for high inflation in the coming weeks.
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State fertilizer holding company Pupuk Indonesia marketing director Achmad Tossin Sutawikara (left) examines a tag with Graha Sarana Gresik president director Ferril Raymond Hattu during the inspection of subsidized fertilizers in a warehouse of state fertilizer company Petrokimia Gresik in Pakisaji, Malang, East Java, in an undated photograph. (Antara/Ari Bowo Sucipto)
T
he government announced on Tuesday that it would cut back on its subsidized fertilizer program and launch a wage-subsidy program in preparation for higher inflation and rising commodity prices in the coming weeks.
Coordinating Economic Affairs Minister Airlangga Hartarto said the government would reduce the types of subsidized fertilizer available for producers. The government will only provide subsidized nitrogen, phosphorus and potassium (NPK) and urea. It will no longer provide subsidized ZA, SP-36 and organic fertilizers.
The government has also allocated Rp 8.8 trillion (US$612.83 million) for a wage-subsidy assistance (BSU) scheme to help low-income workers.
"There will be a transmission of [rising global prices] to the domestic market, which the government cannot completely pass on to the people. Thus, the President has ordered a strengthening of social-protection measures,” Airlangga said in a media briefing after a Cabinet meeting in Jakarta on Tuesday, referring to President Joko "Jokowi" Widodo.
The plan emerged shortly after Indonesia booked a nearly two-year record high rate of inflation in March at 2.64 percent year-on-year (yoy), the steepest inflation since April 2020.
Read also: Cooking oil crisis leads to record inflation in March
Airlangga said the government needed to cut back the fertilizer program as urea prices were nearing US$1,000 per ton and as supplies were disrupted because Indonesia imported several raw fertilizer ingredients, namely potassium and potassium chloride (KCl), from Ukraine.
