Tuesday, 14 May 2013


The affirmation of the government readiness to supplement fuel subsidy has resulted in again issue related to mismanagement of subsidized fuel oil (BBM). If the government has so far asserted repeatedly the importance of budgetary saving in a bid to prevent state finance from running out, the addition of the subsidy funds triggers the reverse stream.

A number of facts in the field show that subsidized fuel is nit only a matter of state funds, which must be spent but also distribution and supervision. The first two issues (amount and fund) are relatively measurable but the two last issues always trigger problems in the field. Smuggling of subsidized fuel by parties in a bid to reap economic benefit should be considered as a factor causing subsidized fuel to run out quickly.

Subsidized fuel management has so far not resulted in an agreement. On one side, parties encourage actively the government to increase the price of subsidized fuel because the measure is deemed necessary to avoid the squandering in the state finance. In additional, the saved funds may be allocated to finance the development in infrastructure. The opinion is supported by assumption that most the subsidized fuel missed the target because it’s enjoyed by wealthy people. However, on the other hand, groups reject surreptitiously the plan to increase the price of subsidized fuel or withdraw fuel subsidy on account that subsidy constitutes a right of the whole people. Therefore, prohibition on wealthy people from using subsidized fuel is only appeal.

Fuel management develops to become a complicated, even extremely complicated issue because it’s driven intentionally or not into political domain. However, it’s difficult to categorize parties encouraging the reduction or abolition of fuel subsidy as parties not having political interest. The government is encourage intentionally to take measures, which are ascertained to draw reaction from the people but the government still determined to supplement subsidy fund also has political interest. It has become a public secret that fuel has strong political influence and the whole choices always bring political implication.

If the government really supplemented fuel subsidy funds (a choice extremely difficult to avoid), the state must withdraw around Rp 6 trillion to purchase around 1.1 million kilo liter of fuel to fulfill the need up to late this year. The amount is not surely few. If we talk about the promise of the government to save state budget, the additional subsidy amounting to Rp 6 trillion surely constitutes a kind of squandering even though the increase is executed on account of protecting the public interest. However, it may draw a question such as how much do the funds really fall on the hand of the poor? Conversely, how much do the funds go to the hand of the wealthy people urged to not use subsidized fuel so far and how much is the quantity of the smuggled fuel due to poor supervision?

The appearance of politics as commander, intentionally or not, causes the settlement of an issue categorized simple to be difficult to realize. It’s taking place now. SBY administration known rather favoring image building is determined to take the measure even though it would cause state finance in tatters for political interest. Amid the rising criticism, SBY regime and Democrat Party indeed must preserve their image to prevent their popularity from decreasing the eyes of the people prior to 2014.

Supplementing subsidized fuel funds surely would increase economic cost but raising the price must be paid by political cost. For a political regime, political cost tends to b avoided, instead of economic cost. Here, short-term political consideration closes the opportunity for the birth of long-term policy alternatives. It’s taking place now.

Business News - December 5, 2012 

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