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(Jakarta Globe) Editorial: Reallocate Fuel Subsidies: Joo Widodo's Biggest Challenge

12/12/2018



A ballooning fuel subsidy that only benefits the nation’s rich is President Joko Widodo’s real challenge. Most Indonesians have been accustomed to subsidized fuels, and it is now the norm to buy fuel at heavily reduced prices.

If the subsidy costs were redirected to the poor and the needy, it would then become worthwhile and socially responsible policy.

But the blatant injustice is that subsidized fuel is mostly enjoyed by the rich who own cars.

Hundreds of trillions of rupiah have been allocated to them, in the form of subsidized fuels, rather than to millions of Indonesia’s poor.

The insanity must stop now. Raising subsidized fuel prices is the only option and no Indonesian president, including Joko, can run away from that. It’s the only way to end this institutionalized injustice.

But like eradicating a cancer that has spread everywhere, or destroying a norm that is believed to be true, it is never easy. Raising the fuel price means Joko will have to step on many people’s toes.

If not managed correctly it will become a stumbling block for his young government, leading to widening social protests and political upheaval.

However, if he can soften the negative impact on the people as a whole, including inflation and sudden food scarcity, while at the same time wisely using the money he saves from the price increase and transparently allocating to the poor, the threat could become a huge opportunity. His time in office will be a lot easier should he swiftly tackle this issue head on. Should he be able to reallocate capital, he would ensure his legacy in Indonesia’s history.

We believe that Joko’s track record of being a clean and honest leader guarantees that he can’t go wrong in his move to increase the subsidized fuel price.