Impact of Fuel Price Increase, Observer: There Will Be New Poor People

Illustration (Photo: Doc. Antara)

JAKARTA - Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira said the poverty rate will increase and new poor people will emerge. This is the impact of the increase in the price of subsidized fuel oil (BBM).

"The increase in fuel prices will increase the poverty line, and result in an increase in the poor vulnerable groups falling below the poverty line. The problem is that there are 115 million vulnerable middle class people, and it's easy to become the new poor," he told VOI, Sunday, September 4.

With the increase in fuel prices, continued Bhima, the government will find it difficult to reduce poverty.

In fact, President Joko Widodo (Jokowi) targets the poverty rate in Indonesia to be reduced by 8.5 percent by 2023.

"That is why the poverty rate is difficult to decrease with the significant increase in fuel prices," he said.

To maintain the purchasing power of these vulnerable poor people, continued Bhima, there are several things that the government must do.

First, the government is advised to reduce the rate of Value Added Tax (VAT) on Pertalite fuel to zero percent.

Not only that, said Bhima, but the government must also lower the general VAT rate from 11 percent to 8 percent. As well as maintaining price stability in the food sector.

"And add social assistance of up to Rp. 150 to Rp. 200 trillion to cover the effects of 64 million MSME business actors, workers in the informal sector who have not entered BSU, to vulnerable middle class households that are not included in the BLT coverage," he said.

For your information, the government through the Ministry of Energy and Mineral Resources has officially adjusted the price of subsidized fuel for Pertalite and Solar types.

For the new price, the government has set the price of Pertalite which was previously IDR 7.650 per liter to IDR 10.000 per liter.

The subsidized diesel which was previously IDR 5.150 per liter has increased to Rp6,800 per liter.

The price increase is effective one hour from the announcement of this price adjustment, namely at 14.30 p.m. This was conveyed by the Minister of Energy and Mineral Resources Arifin Tasrif in a press conference with President Jokowi at the Merdeka Palace, yesterday, Saturday, September 3.