The polemic over whether or not the Government was going to increase
price of oil fuel continued to roll. The middle class and business circle
agreed that price of oil should be increased. This group was rational: it was
not advisable that the subsidy burden be shouldered by APBN State Budget
because it would weaken development capability of the state.
On the contrary, the low income group was almost certain they would not
agree that the Government should increase price of subsidized oil. Therefore,
the Government was expected to be wise enough to find compromise to accommodate
the interest of both groups. Now that Indonesia was in the state of net
imported of oil, the trade balance would constantly be under pressure.
So far the deficit in Trade Balance was predicted to continue as long as
the policy of oil subsidizing could not be controlled by the Government.
Economic growth needed support of enormous energy supply. However ironically
today economic volume as national oil production kept diminishing due to poor
management.
Apparently deficit in trade balance would continue to swell if
performance in oil production continued to decline. The enormous need for
energy at home must be covered up with imported oil [thank God Indonesia still
export gas] in vast amount. If this process were let to happen amidst
competitive world’s economy, it would be hard to catch up the backlog.
Indonesia’s trade balance again posted deficit in February 2013,
amounting to US$ 327.4 million. Accumulatively through January-February 2013,
total deficit of Indonesia’s trade balance came to US$ 402.1 million. The cause
of deficit in trade balance was import of subsidized oil the Premium type.
The year 2012 was the lowest point of gas production and this year 2013
was predicted to be the lowest point in oil production, i.e. around 840-850
barrel per day. Meanwhile the need for subsidized oil in 3013 was predicted to
reach 50 million kilolitres till end of year.
Various measures had been taken by the Government to suppress oil
consumption, but was not too fruitful. The urgency of oil supplying was solved
by importing oil and gas, higher and higher year after year. The best way to
meet high need of oil was by importing. However a policy as such could be
dangerous in the long run in the event that producer countries held back their
stock of oil and fiscal capability was not well guarded.
A sound breakthrough was necessary to control deficit in Indonesia’s Trade
Balance today in the oil gas sector by maximizing use of gas, alternative
energy and find new potential oil fields.
About oil gas, it seemed that the government was trapped in their own
dilemma between increasing price of subsidized oil and restriction of
consumption of subsidized oil. To increase oil price would have their various
effects. Prices of people’s essential need would go up, and people’s buying
power would drop. The Government was afraid to be stormed by demonstration. Not
to increase oil price the way it was happening now would mean a threat to the
nation’s economic resiliency and growth potentials.
Not to increase oil price but restrict oil consumption, would just be as
problematic. A measure as such was no easy to implement. Field control, the way
it had been, was weak. There were even loopholes in the regulation which had
been taken advantaged of by irresponsible people. So why choose an option which
was hard to apply?
Some people believed that the policy to increase price of subsidized oil
was more reasonable rather than to restrict consumption on private cars. Such
was to prevent disparity among the public. Allocated subsidy for oil was rated
as more beneficial if it was run to help the poor directly rather that to
benefited by the upper class.
If the option of oil price increasing was taken, the Government would
not be trouble by swelling subsidy amount. The allocated subsidy should soon be
used for the benefit of the people in terms of health, education etc. as long
as subsidized oil was available in the market the people would rush for it.
The Governor of Bank Indonesia Darmin Nasution and Minister of Finance
Agus Martowardojo had repeatedly signaled how important it was to increase
price of oil which had always been subsidized. The objective was to maintain
energy resilience, economic resilience, monetary resilience and fiscal
resilience. All were inter-related in economy, which notably also involved the
public. The statement was certainly more than just lip service because it was said
by the Minister of Finance. By government’s calculation, control and saving of
consumption of subsidized oil must be exercised by Semester One of this year,
or else oil quota of 46 million kilo litter in APBN Budget 2013 could be
surpassed. If the quota was exceeded like in 2012 deficit of Financial Balance
would swell even wider.
If the measure taken to control subsidized oil was not effective, the
option to be taken was probably to axe budget for Government’s expenditure.
Other alternative was adjustment of oil price. The BPH Migas had calculated,
quota for subsidized oil this yame to 48-50 million kilo litter. Last year the
Government proposed increase of quota three times.
It started with 40.1 kiloliters, then increased to 40.04 million
kilolitres and finally it came to 45.2 million kilolitres. There was even
additional 1.23 million kilolitres of subsidized oil by end of 2012 which was
proposed for quota of subsidized oil 2013.
Now the Government threw a discourse to use information system to
control subsidized oil. Many cicles believed this was too sophisticated and
might take a long time to realize. Suspicious emerged that this long processed
was deliberately proposed to delay timing and finally to completely cancel when
the rule’s office ended next year.
The Government had the bad habit of going the wrong way. An example was
application of stickers on cars. Any cars with stickers on it were not
permitted to consume subsidized oil. The question was what if car owners peel
of the sticker? It means they were permitted to buy subsidized oil.
Supposedly stickers were posted on cars which were allowed to buy
subsidized oil. Surely no one would peel the sticker off because if they did so
they must buy non subsidized oil. The problem was that the Government had not
set any criteria of which car were permitted to use subsidized oil.
In fact if only Government had the courage and not be haunted by any
possible people’s demonstrations, to increase oil price by Rp500 to Rp1, 000
per litre would still be reasonable and acceptable. The low strata people would
force themselves to be more efficient in oil consuming oil for two wheel or
four wheel vehicles, they would not use cars all day and at all time.
Today just because price of subsidized oil were cheap, because of
subsidy many people of the low income group lived extravagantly and drive to
his hearts content. Far or near the distance, they would go by motor vehicles
and refuse to go on foot. To force them to be thrifty, increase of oil price
was the solution. The Government did not have to be afraid of being unpopular
in the eyes of the people. The most important thing was that the Government
worked hard and be responsible and soon show the benefits of oil price
increasing and the people would be happy. (SS)
Business News - April 10,2013
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