The Jakarta Post
The government has assured there will be no increase in subsidized fuel prices amid calls from economists who say a fuel-price hike would help ease the current account deficit (CAD).
“The [subsidized] fuel price will be maintained,” said state-owned oil and gas holding company Pertamina vice president of communications Adiatma Sardjito on Sunday as reported by kotan.co.id.
He said the government would also maintain the prices of non-subsidized fuels – Pertalite, ertamax series, Dex and Dexlite.
Pertamina retail director Mas’ud Khalid explained that the government and Pertamina had taken various issues into consideration, including people’s purchasing power.
On average, people set aside 7.5 percent of their income for energy spending – electricity, liquefied petroleum gas (LPG) and fuel --, Mas’ud said, adding that for fuel alone, people spent between 4 and 4.4 percent of their income.
University of Indonesia (UI) economist Chatib Basri said an effective and quicker way to narrow the CAD without significantly harming domestic industries was by raising fuel prices, as it would lower fuel consumption and therefore lower demand for fuel imports.
“If the price of [subsidized] fuel increases, then the price disparity [between subsidized and non-subsidized] fuel will be narrowed,” said Chatib, who was the finance minister from May 2013 to October 2014, adding that a similar policy was implemented in 2013 when Indonesia faced high external pressures stemming from the “taper tantrum”. (bbn)