INDEF Economists The Value Of The Regulatory Government Implements Energy Subsidy Reform

Institute for Development of Economics and Finance (INDEF) economist Abra Talttov (photo: twitter @astarte2017)

JAKARTA - Institute for Development of Economics and Finance (INDEF) economist Abra Taltov assesses that the government is still hesitant in implementing energy subsidy reforms in Indonesia.

Abra said the government was still hesitant because the reform of energy policies would later have an impact on society's social and economics.

"May or June last year the government finally withdrew to reform subsidies policies because at that time world oil prices had soared. That alone has become a reflection that the government is hesitant to reform energy subsidies," Abra told reporters, Saturday, January 14.

Abra explained that previously the government had canceled the subsidy reform and even increased the subsidy quota and energy compensation to Rp502 trillion.

According to Abra, the steps taken by the government have an impact on people's behavior which is increasingly complacent with the addition of compensation.

"The impact of the community is complacent. So when there is a turmoil in the price of fuel, the government will definitely add subsidies and energy compensation," continued Abra.

Abra further added that energy and transportation have implications for the amount of Indonesian inflation in 2022. Based on data from the Central Statistics Agency, Indonesia's Consumer Price Index (CPI) throughout 2022 experienced inflation of 5.51 percent.

"The biggest contributors are fuel and transportation. Even transportation until last December inflation was 15.3 percent.

For this reason, he urged the government to make efforts to reduce the impact of inflation so that it does not spread because high inflation has an impact on other sectors and hinder economic growth.

"If high inflation has double digits, it will also have implications for other sectors and will hinder economic growth," said Abra.