The Fuel Subsidies Dilemma

TEMPO.CO, Jakarta -The government is in a fluster trying to rein in inflation caused by the price increases of subsidized Pertalite gasoline and Solar diesel fuel by 30 and 32 percent, respectively. Prices were raised to prevent spending on subsidies tripling to Rp502 trillion.

According to the government’s calculations, by the end of the year, inflation could exceed 6.49 percent, far higher than the assumption in the State Budget of 4.8 to 5.5 percent. Inflation will reduce consumption and decrease people’s purchasing power, which will in turn depress economic growth.

What will the government do? President Joko Widodo has asked the finance minister, the social affairs minister and the manpower ministry to provide additional social assistance. From this month, the government will provide direct cash assistance from the budget previously allocated for subsidies.

The manpower ministry will also increase the wage subsidies for workers with monthly incomes of less than Rp3.5 million. Jokowi has also ordered regional governments to set aside general allocation funds to be used to subsidize the operational costs of public transportation, fishermen and microenterprises.

Will this be effective? We will need to wait and see. After all, the date of the fuel price rises was decided by Jokowi based on the Javanese calendar! He ignored suggestions from his aides to announce the fuel price rises. Enjoy the magazine.

Fery Firmansyah

Junior Managing Editor

Bracing for Inflation

Jokowi has asked regional governments to set aside special allocation funds to reduce inflation caused by fuel price rises in the regions. Will this be effective? 

Aid to Prevent Unrest

The government is relying on direct cash assistance and social assistance to reduce inflation caused by fuel price rises. Where will the money come from?

Discussions to Dampen Demonstrations

Fuel price rises always lead to demonstrations opposing them. How will the police keep order during demonstrations by workers and students?


A Half-Hearted cut

Increasing fuel prices is one way to save state finances. But it does not solve all the problems.


Next Year’s Subsidy Disaster

Are state finances now in good shape following the fuel prices rises? They seem not. Why?


The Eldest Son’s Betrayal

Suharso Monoarfa was suddenly removed from his position as general chairman of United Development Party (PPP). Those close to him maneuvered quickly when he was abroad.


The Divided Development Party

Once again, there is dual leadership within the PPP. This is a result of political pragmatism and a poor conflict resolution mechanism.


Battleship Quarters for Birds-of-Paradise

It was discovered that an Indonesian Navy battleship transported 39 rare wild animals from Papua. This smuggling method utilized national military facilities.


Protecting Papuan Wildlife

The trade in wildlife and the destruction of forests in Papua continue. The central government must support Papua and West Papua becoming conservation provinces.

Savage Mutilation in Mimika

Papuans at Mimika have been brutally murdered and mutilated. This was done by members of the military and civilians with arms dealings and robbery as alleged motives.

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Time to Increase Fuel Prices

31 Agustus 2022

Time to Increase Fuel Prices

The government has thrown in the towel over fuel subsidies at a time of rising world oil prices.