Tuesday, 9 July 2013


The certainty of increase of price of subsidized oil fuel (BBM) had been done by the government. Better late than never, perhaps this is a proper expression to describe how difficult it is for the government to decide. It fact, it is common knowledge that Indonesia is mentioned as one of the countries who fix the price of oil fuel at a quite low rate, because of the high subsidies given by the state.
However, if we examine the list of fuel price in a number o countries prepared by Bloomberg, it turns out that the above opinion is not entirely true. When compared to superpower country like the Unite States or neighboring country Malaysia, price of oil fuel in Indonesia is even more expensive.
In a report prepared by Bloomberg Rankings, using data compiled by Bloomberg, Associates for International Research Inc, Europe’s Energy Portal, International Monetary Fund (IMF), and United States Energy Agency, Indonesia ranks 49 with fuel price at USD 3.68 per gallon (one gallon equal to 3.7 liters), on top of United States and Malaysia, each of which occupies ranks 51 and 53.
Fuel price in the United States during the research conducted in January 3-18 is USD 3.29 per gallon, while in Malaysia USD 2.36. Compared to other Southeast Asian countries such as Singapore, the Philippines, and Thailand, price of fuel in Indonesia is cheaper.
Singapore ranks 37 on the list with fuel price at USD 6.29 per gallon, followed by the Philippines on the 43rd position (USD 4.87) and Thailand on rank 47 (USD 4.42). if compared to Turkey or Eurozone countries which are currently being hit by debt crisis, such as the Netherlands, Italy, Portugal, Greece, Belgium, France and Germany, fuel price in Indonesia is very cheap.
Turkey occupies the top position in selling fuel at the most expensive price, which is USD 9.89 per gallon, followed by Norway (USD 9.63), Italy (USD 8.87), Portugal (USD 8.82) and Greece (USD 8.62). Meanwhile, countries which have been known for their fuel. The cheapest fuel prices are enjoyed by the people of Venezuela who only pay USD 0.06 per gallon, the Saudi Arabia (USD 0.45) and Kuwait (USD 0.81).
They, does the data shows that oil price in Indonesia is relatively low and should be increased in order to reduce fuel subsidies? It cannot be said that oil price in Indonesia is in the top ten, meaning that people have to spend quite a lot of money from their income to buy fuel.
Unlike the Netherlands (3) or Italy (4), which are included in the ranks of countries with the most expensive oil prices in the world, but ranked 40 and 31 in terms of revenue that must be spent by their residents to buy fuel. Indonesia is better than Pakistan, India, the Philippine, and Bulgaria. Indonesia is far behind compared to Singapore or Malaysia, which ranked 50 and 38 on the list.
Regardless of to the fuel price benchmark and consumptive power the society, the decision to increase subsidized fuel price has been made. Of course, people expect that there will be compensation for the government’s attempt which is considered unpopular by most people. With the increase in subsidized fuel price, it means that there is a fuel subsides saving. Reportedly, the figure is around 30 trillions. A figure which is large enough to meet the needs of the poor. It is expected that the allocation of the saving is right on target, not only in the form to Temporary Direct Cash Assistance (BLSM) for the next four months.
First, for the allocation of fiscal health so that the Fiscal space will be more healthy, productive and sustainable. This will bring a positive sentiment to both the Rupiah currency and the Jakarta Composite Index (IHSG).
Second, for the allocation of productive sector, especially to support financing of development of basic infrastructure projects which are the rights the poor. For example, the construction of bridges, public transportation, hospital and community health centers (Puskesmas), and schools.
Third, for social assistance in the form of BLSM to maintain purchasing power. This is important so that the rate of public consumption, which has been proven to be the backbone of economic growth, will not degenerate. With maintained purchasing power, market expectations become positive, because the factories will continue production to meet public demand. Economic activity will still be running so that target of economic growth at 6.3% for this year could be achieved.
Fourth, fuel saving would reduce the level of air pollution in urban and rural areas so it will sustain health of the community. As a result, health care cost can be reduced even through the government is still distributing budget for public health insurance (Jamkesmas) for the poor.
Fifth, for the long-term welfare of the people because people are educated to have an organized, frugal, and disciplined lifestyle. With the increase in fuel price, people have to change their spending habits. Spending activities will be based on the principle of priority. In the end, the financial health of the community will improve so that the subsidized fuel price hike will not overburden the community.
Thus, the increase in subsidized fuel price not only favors the interest of the government, but also gives fulfillment to the community in the long run. (E)

Business News - June 26,2013                

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