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Jakarta Post

Oil price decline: A lost chance to get rid of a bad policy

  • David Stanford

Jakarta   /   Fri, January 2 2009   /  10:29 am

The Indonesian government has once again lowered the subsidized price of petrol. Since last week, the price of premium petrol sold at Pertamina has been set at Rp 5,000 per liter. The falling international price of oil has allowed the government to take this step without seriously jeopardizing the budget bottom line. President Yudhoyono must feel great relief that he has been able to reverse the most unpopular decision of 2008 before he faces re-election in 2009. Unfortunately, the government did not make the decision that was needed. In saying this, I am not suggesting that the petrol prices should have remained constant. On the contrary, the current circumstances would seem to warrant a reduced price of petrol. However, this price reduction should have taken place outside the constraints of retail price subsidies. The government should have seized the opportunity to al...