The Government Instead Of Raising Fuel Prices, It's Better To Overcome Subsidy Leaks

Illustration (Photo: Doc. Antara)

JAKARTA - Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira suggested that the government tackle the problem of leakage in the use of subsidized fuel by large-scale industries rather than raising prices.

"The win-win solution is that the government revises the rules to stop the leakage of subsidized diesel that is enjoyed by large-scale industries, mining and large plantations," said Bhima as quoted by Antara, Monday, August 22.

According to Bhima, by closing the diesel leak, the government can save on subsidy spending, considering that 93 percent of diesel consumption is subsidized.

He said that regulating the leakage of subsidized diesel fuel in trucks transporting mining and palm products was a better policy than increasing the price of Pertalite and diesel.

This is because the increase in Pertalite and diesel prices will affect the community, including the middle class, because they will begin to hold back their spending.

Withholding public spending will have an impact on the demand for the manufacturing industry which has the potential to be hit, labor absorption will be disrupted until finally the government's economic recovery targets are not on target.

"The government's economic recovery targets could be missed," he said.

In addition to regulating the leakage of subsidized fuel use by large industries, Bhima also suggested that the government use the APBN surplus which until July 2022 reached Rp106.1 trillion or 0.57 percent of GDP to cover subsidies.

He added that the government could also in parallel cut infrastructure spending and expenditure on procurement of goods and services at the regional and central governments to patch energy subsidies.

“Why was the surplus not prioritized to cover energy subsidies? There should be no indication that the government does not want to cut significantly the budget that is not urgent and sacrifices energy subsidies," he said.