Tuesday, 23 September 2014


Commission VII of Parliament saw the need of Public Relations campaign to explain the meaning of the word ‘subsidy’ and ‘budget’ to the people because very often people were confused about the meaning of the two words. The result was that the people thought that the Government did not stand on the side of the people. :”The message should be: not to eliminate subsidy bit to relocate budget. People who don’t own any vehicle are not enjoying any subsidy in any from but perhaps only multiplier effect like a driver earning salary from his employer who owns a car. In reality the low class people are not getting anything from oil subsidy” Satya Wirayudha, member of Commission VII told Business News [25/8].

In principle, the Parliament supported decision of the elected President Joko Widodo to reduce subsidy but simultansously the Government must build the right perception of subsidy. The budget re allocation plan with reference to RUEN, if the new Government did not publicise paradigm through PR the budgeting policy would be branded as “not being on the side of the low class people.”

The fiscal instrument was in the domain of the Government. The Parliament could not touch fiscal; but Commission VII of House saw trade balance as related  to import of oil and export of gas, so current deficit account  was inseparable from the mathematics of fiscal, in the domain of Board of Fiscal Policy the Ministry of Finance. “We house make policies, but we are not executors. The effort to unveil fiscal is inseparable from the swelling oil subsidy budget.”

Meanwhile anxiety over inflation as consequence of subsidy withdrawing was only applicable to the upper middle class. If price of oil were increased and subsidy was directly given, there would be downturn of purchasing power of the upper middle class people. “People use to say increased oil price means inflation, but it applies only to certain strata of people.”

The Parliament also focused the perception of fiscal room as set forth by President SBY on august 25 last. House saw that the case of fiscal as the Government’s capacity to manage cashflow. The state’s budget which was fully allocated had no room for maneuvering. The wish to reduce State Budget 2015 burden by the elected President was hard to realize due adverse cashflow.

“whatever his ambition, President Jokowi had no wide room for playing with fiscal. If the state was broke, the question is what had money been used for so far? Paying debt? So to pay subsidy is not the right thing. It is right if the money were used for propelling economy, moreover tax ratio had increased by 15% and Government’s revenue would increase.” (SS)

Business News - August 29, 2014

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