V

ice President Jusuf Kalla has asserted that the government's plan to raise fuel prices has strong backing from the Indonesian Democratic Party of Struggle (PDI-P), despite the plan being rejected by some of the party's members.

PDI-P politician Effendi Simbolon previously said that the PDI-P, which backed President Joko 'Jokowi' Widodo's presidency, had yet to determine its stance on the fuel price increases. He criticized Kalla's tough stance on the issue, which he found to be in contrast with Jokowi's calmness.

Kalla was quick to respond on Wednesday that Effendi's statement did not represent the voice of his party. 'That is just a personal statement,' Kalla told reporters.

Vice Presidential spokesman Husain Abdullah said the transfer of funds from fuel subsidies to more productive spending was part of the government's program and was supported by all parties in the Great Indonesia Coalition, which comprised the PDI-P, the National Awakening Party (PKB), the NasDem Party and the Hanura Party.

'Pak Jokowi [in a series of meetings] has clearly asserted that the subsidy [funds] will be transferred from consumptive to productive purposes, such as building irrigation channels, roads and bridges. Pak JK [Kalla] did not decide this alone,' he said as quoted by local media reports.

Jokowi's pledge for reform is facing a challenge, with sizable, poorly targeted fuel subsidies heavily burdening the state budget.

Economists have said the time is right for the government to push up the fuel price, especially with state-owned oil and gas firm Pertamina, which distributes subsidized fuel, inching closer to the 46 million-kiloliter subsidized fuel cap in this year's budget.

Ballooning fuel subsidies are not only a problem for the state budget, but are also a drag on the trade balance due to high oil imports, causing a significant trade deficit of US$1.67 billion in January to September this year and a current account deficit.

Coordinating Economic Minister Sofyan Djalil said on the same day that the subsidy would be shifted from non-productive to productive spending, targeting people impacted by the fuel price increase. This spending would be channeled into a variety of projects like the provision of new fishing equipment for fishermen and credit assistance for small and medium enterprises.

'Next year will be important. In the revised state budget, we aim to, for example, improve irrigation channels covering 1,000 hectares of farming areas. If this situation can be enhanced, the output can be increased by 4 to 5 million tons,' he told reporters.