Instead Of Raising Prices, The Government Is Advised To Limit The Use Of Fuel Only To Certain Groups

Illustration. (Photo: Doc. Antara)

JAKARTA - The government's plan to increase subsidized fuel prices has received attention from various parties. One of them is from the Vice Chancellor of Paramadina University, Handi Risza.

Handi realized that this policy could not be separated from the burden of subsidies borne by the government which reached Rp. 578.1 trillion, due to the increase in oil prices in the international market and compensation costs that must be borne by the government. However, the policy of increasing fuel prices will certainly have a significant impact on the lives of many people.

One of the feared impacts is the increase in the prices of goods, either directly or indirectly. "So the government should control subsidized fuel by limiting its users to certain groups, such as public transportation to motorcycles with small cc," said Handi in his statement, Monday, August 22.

Handi revealed that the high commodity prices in the international market have caused global inflation in many countries.

“Annual inflation has almost penetrated 5 percent year on year (yoy), or is at the level of 4.94 percent yoy. In fact, food inflation has reached 10.32 percent (yoy). If there is an increase in the price of subsidized fuel in the next week, it is certain that the inflation rate will move up. The impact will certainly be very burdensome for the lives of most people," he continued.

Handi also highlighted the issue of starting to recover people's lives after the COVID-19 hit, which made economic activity recover. Although economic growth in the first and second quarters grew by 5.01 percent and 5.44 percent, still supported by high commodity exports, public consumption also showed significant movements.

"The increase in subsidized fuel prices is feared to hit people's purchasing power and consumption again, so that it has an impact on the ongoing economic recovery, and it is feared that economic growth will slow down again," said Handi.

According to him, the planned increase in subsidized fuel prices will have a big impact on the business community, especially the MSME sector and other informal small businesses that are often not touched by the Government's social assistance programs. So far, most of the MSME and informal sectors have used subsidized fuel to run their businesses.

“Especially before, they have also been affected by the increase in cooking oil prices. It is feared that the increase in subsidized fuel will further make MSMEs and other informal entrepreneurs worse off, it is feared that poverty and unemployment will increase.' Said Handi.

For information, subsidies are a form of government alignment with the general public. The amount of energy subsidies and compensation in the 2023 State Budget is planned at Rp336.7 trillion.

The details are Rp210.7 trillion for energy subsidies and Rp126 trillion for energy compensation. This means that the government has predicted that the price of oil will return to below 100 US dollars per barrel.

“The decline in global oil prices does not necessarily mean that fuel prices will also decline. So that people bear a big burden in using fuel which should be adjusted to global oil prices," he concluded.