Sacrificing 70 Percent Of Consumers, The Government Is Asked Not To Raise Subsidized Fuel Prices

Rising fuel prices can affect inflation. (photo: doc. pertamina)

JAKARTA - Public communication regarding the plan to increase the price of fuel oil (BBM) subsidies Pertalite and Solar is very intensively communicated by the Government. Starting from President Joko Widodo, followed by the Minister of Investment/Head of the Investment Coordinating Board Bahlil Lahadalia, then continued by the Coordinating Minister for Economic Affairs Airlangga Hartarto.

Finally, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said that President Joko Widodo might announce an increase in Pertalite and Solar prices next week.

Economic observer from Gadjah Mada University, Fahmy Radhi, said that the option to increase fuel prices at this time was not the right choice. According to him, the increase in the price of Pertalite and Solar, whose proportion of the number of consumers is above 70 percent, will certainly trigger inflation.

"If the increase in Pertalite reaches Rp. 10,000 per liter, the contribution to inflation is estimated to reach 0.97 percent, so that inflation for the current year can reach 6.2 percent yoy," he said in a statement to the media, Saturday, August 20.

He continued, with inflation of that magnitude will worsen the purchasing power and consumption of the people so that it will reduce economic growth which has reached 5.4 percent.

"So that the momentum of economic achievement is not disrupted. The government should not increase the price of Pertalite and Solar this year," he added.

For this reason, continued Fahmy, the government should focus on limiting subsidized fuel, which is around 60 percent which is still not on target. According to him, MyPertamina will not be effective in limiting fuel so that it is right on target and even causes injustice by setting the criteria for cars of 1,500 CC and below that are entitled to use subsidized fuel.

"The most effective subsidy fuel restriction at this time is to stipulate two-wheeled vehicles and public transportation that have the right to use Pertalite and Solar. Apart from motorcycles and public vehicles, consumers must use Pertamax and above. gas stations," he continued.

For this reason, he said, the criteria for motorcycles and public transportation that are entitled to use subsidized fuel should be immediately included in Presidential Regulation No. 191 of 2014 as a legal basis. "Rather than just raising the price of subsidized fuel, the government would be better off making a decision in the shortest possible time regarding the solution that the government believes is the most appropriate without causing new problems," he concluded.