This is the benefit of Chatib Basri's fixed fuel subsidy
Reporter: Benedictus Bina Naratama | Editor: Barratut Taqiyyah Rafie
JAKARTA. The allocation of fuel subsidies which reached hundreds of trillions of rupiah made the government give up. Since last November, President Jokowi announced the transfer of fuel subsidies which resulted in an increase in subsidized fuel prices by Rp 2,000 or 30%.
In order to prevent an increase in fuel subsidies in the future, the government will start implementing fixed fuel subsidies next year. The former Minister of Finance, Chatib Basri, said that if the fixed fuel subsidy was applied, there would be no more fiscal risk due to fuel. “With the implementation of fixed fuel subsidies, Indonesia’s economy will be very healthy, fiscal space will become available, and of course market confidence will increase,” he said last weekend.
Because of these benefits, Chatib revealed that since 2013, he has proposed this policy to the DPR. The current development has begun to be discussed with Commission XI and the DPR RI Budget Committee.
However, Chatib still acknowledges the disadvantages of implementing this fixed fuel subsidy policy. He explained that the subsidized fuel price would increase if the world oil price or the rupiah exchange rate weakened. He believes that the negative side of this fixed subsidy is much smaller than the benefits. “In my opinion, if the Indonesian economy wants to be healthy, it will immediately implement a system of fixed fuel subsidies,” said Chatib.
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