Increasing The Price of Subsidized Pertalite and Diesel Fuel
The government is no longer able to withstand the increase in subsidized and non-subsidized fuel prices. In the end, the Jokowi-Maruf government chose to increase fuel prices and shift subsidies into cash fuel assistance rather than stop projects that are not a priority for the people today, and delay government spending.
The government claims that from the initial Rp 170 trillion project in the 2022 State Budget, the energy subsidy budget has swelled to Rp 502 trillion.
The total energy subsidy and compensation in the 2022 State Budget reaches Rp 551.9 trillion, which is allocated Rp 208.9 trillion for energy subsidies, Rp 234.6 trillion for energy compensation and Rp 108.4 trillion for underpayment of energy compensation in 2022.
Of the sub-total energy subsidy of Rp 208.9 trillion, Rp 149.4 trillion is allocated for Pertalite and Diesel fuel, starting with LPG through PT Pertamina (Persero). Then, Rp 59.6 trillion for electricity subsidies through PT PLN (Persero).
Then from the energy compensation subtotal of Rp 234.6 trillion, Rp 213.4 trillion was allocated for Pertalite and Solar through Pertamina. Then, Rp 21.4 trillion for electricity through PT PLN.
Finally, the subtotal underpayment of energy compensation in 2021 is Rp 108.4 trillion, Rp 83.8 trillion is allocated for Pertalite and Solar which will be paid to Pertamina. Then, Rp 24.6 trillion for electricity to be paid to PLN.
From regime to regime the issue of subsidies always has two perspectives. The people always use the "what should be" perspective, while the government uses the "what is possible" perspective.
So this time the Jokowi-Maruf Government no longer has the ability to increase energy subsidies, and divert the energy subsidy budget into fuel cash assistance.
BBM cash assistance is allocated in the amount of Rp 12.4 trillion for 20.65 million underprivileged families which will be distributed in stages over four months (September-December 2022). Also allocated a budget of Rp 9.6 T for 16 million jobs with a maximum salary of Rp 3.5 million per month in the form of wage subsidy assistance provided in the amount of Rp 600,000.
President Jokowi also instructed local governments to use 2 percent of general transfer funds of IDR 2.17 trillion for public transportation assistance, online motorcycle taxi assistance, and for fishermen. The total allocation of cash assistance for BBM etc. is Rp. 24.7 trillion.
The shift from the allocation of energy subsidies to cash assistance for BBM plus looks very unequal. The energy subsidy during January-August 2022 is IDR 208.9 trillion, meaning that it reaches more than IDR 26 trillion per month. Or Rp 104 trillion for four months.
Compare this with the BBM plus cash assistance budget which is only Rp. 24.7 for 4 months.
This means that many community groups will not receive fuel cash assistance. Or there will be many workers who do not receive wage subsidy assistance, for example, those whose maximum salary is above IDR 3.5 million per month.
Whatever the considerations, the Jokowi-Maruf government has made the decision from the government's perspective. In other words, the government considers that most Indonesians who do not receive cash assistance for BBM plus will be able to face the increase in fuel prices and the impact of other price increases.
President Jokowi did not choose to try to reduce the allocation of non-priority project budgets or delay government spending.
The same attitude as the opinion of a minister in a closed forum who supports the transfer of the subsidy budget to infrastructure with the parable "subsidy only makes state money all dung".
Like it or not, the people must be prepared to face the impact, namely inflation due to rising prices. Inflation arising from the supply side is due to rising production costs, not due to increased consumer demand. Because from the demand side, people's purchasing power has not recovered since the pandemic.
Many countries, such as the US and Turkey, experienced rising food and transportation prices due to rising fuel prices. US inflation is over 9% and Turkey is above 50%.
The question is, if Indonesia will experience food and transportation inflation due to the increase in fuel prices, will the Indonesian people be strong like the people of the US and Turkey?
Before the price of subsidized fuel rose, the burden on the community was already heavy due to the increase in the price of a number of goods, such as LPG, basic necessities, and others. So to this day the fuel subsidy is felt to be very meaningful for the community to restore the economic condition of their families.
So now, even though the fuel subsidy has been diverted into cash fuel assistance, after all, the 33.3% increase in Pertalite prices will disrupt market psychology and affect market behavior.
In addition, switching fuel subsidies into cash fuel assistance is actually not the best decision, because its implementation is prone to corruption, as has been the case, for example social assistance during the pandemic.
The fuel cash assistance cannot prevent inflation of prices in the market. What will happen is that people who receive cash assistance for BBM will be able to buy fuel but cannot afford basic commodities whose prices are rising.
Today's middle class even though they still have assets, but they have liquidity/cash difficulties. So the inflation of prices will be felt by the wider community. Not only those who received BBM cash assistance but also the middle class who did not receive BBM cash assistance.
Then what is the attitude of civil society to respond to the increase in fuel prices and the impact of inflation? Will the DPR RI be silent and accept the government's decision to increase the price of Pertalite by 33% more?
If we look at the previous regimes, the increase in fuel prices always raises pros and cons in civil society. There are even civil society figures who support the government's decision. But in my view, the situation today is different.
The people of Indonesia have been very frugal since the pandemic hit until today in order to survive. In the FGD conducted by Infusion for the purpose of writing the book "Greed in the Middle of a Pandemic", it was revealed that many groups of housewives had to earn a living because their husbands were laid off, for example being Ojol drivers.
Then today the people must be "beaten" again with the increase in fuel prices. This shows how strong the Indonesian people are forged by the sufferings of life. But how long will the people's endurance last?
However, when global uncertainty continues to soar world oil prices, the government's ability to distribute cash fuel assistance also has its limits.
What is clear is that the number of poor people will increase due to rising fuel prices and food price inflation. When those limits are crossed, there will be even greater dangers that await.