There's been so much debate raging on about this topic, and usually I'm not so interested to get entangled in the messy web of economics. However, I'll do my best to write something about the recent fuel price hike...and not to make a complete fool of myself.
On one side of the debate, the govt wants to reduce the fuel subsidy, as it has become more of a burden to the state budget. They claim that the subsidy will be compensated by other means of helping the poor such as direct cash aid (BLT) and community empowerment. The reason behind this: skyrocketing fuel price in the world, hence the swelling subsidy, and apparently the subsidy doesn't really reach its target. The govt said that most of it is being enjoyed by the more affluent demographic.
On the other side, most politicians, activists, and random people reject the hike. I don't know if those politicians reject the plan for the poor or for the upcoming election, but most fractions in the DPR showed strong opposition. The hike will certainly hurt the poor because it will also raise the price of basic goods. Even the hike plan itself triggered price increases everywhere. Other parts of the opposition also criticized the BLT, warning that it doesn't really help. Instead, such aids will only breed beggar-like mentality. And who are we to forget that this is Indonesia: the BLT money will probably find its way into some big officials' pockets faster than you can say "archuleta".
Anyhow, President Susilo Bambang Yudhoyono and VP/president-wannabe Jusuf Kalla decided to go ahead with the controversial plan, raising prices up to 28.7 percents yesterday.
As far as I'm concerned, the fuel price hike is sadly inevitable. The state cannot keep its citizens in a delusional low-fuel-price world using subsidy forever. The world is facing an energy crisis, live with it. Fuel in other countries is already reaching record prices; if the govt insists on keeping prices low, the state budget will get a serious beating from subsidizing fuel price. And then what? Sacrifice other budgets for the sake of living in delusion? No. So far, I agree with the govt.
Nevertheless, the cash aid should be reviewed too. This program is rushed, suspectedly by the pres-wannabe just like every other "brilliant" plans he hatched. After ranting around for the ridiculous national exam and kerosene-to-gas migration, now he wants to be Santa Claus by spreading the love (read: money). How on earth can the govt make sure that BLT-receivers use the 300.000 to survive and not burn it on cigarette?
Learning from past experience, it's certain that the BLT distribution will resemble chaos, due to unique Indonesian efficiency. The govt expects poor grannies to queue under sweltering heat, crunched in a unruly crowd to make ends meet. The aid is also bound to be a conflict source because what we see as "poor" is not the same as the govt's "poor". One desperate family may get the money while another similarly-desperate family can only hope in jealousy.
At this point, maybe the BLT is justified, but not in the long term. No one expects that 300.000 rupiahs can magically save a family from poverty. The govt should instead channel the money to community empowerment so as to make the poor, as poor as they are, independent. The adage "Give a man a fish and yada yada yada" is clichéd like hell, but it still holds true. Ask Grameen Bank's Nobel-laureate Muhammad Yunus if you don't believe me. The govt should also use the money to improve education and health services, along with making sure that it is accessible to the poor. Quality education is one way to free the people from poverty, while good health service will mean that people can get out of poverty as a living being, not as a suicidal corpse.
OK, it's just my perspective, and I've never been too fond of economics anyway. But the last time I checked, I have the right to write about anything I want. Oh yeah, I just watched Speed Racer yesterday, expect a review soon.
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