Fuel Price Hike Will Not Add to Inflation: Chairul Tanjung
29 July 2014 16:30 WIB
TEMPO.CO, Jakarta - Coordinating Minister for Economic Affairs Chairul Tanjung said that a fuel price hike will not increase the inflation rate. According to Chairul, inflation increase is more driven by rising food prices.
"Inflation is not the base to raise or lower [fuel] subsidy. What needs to be maintained instead is food price stability," he said on Monday, July 28, 2014.
Chairul personally believed that replacing goods subsidy with "people subsidy" is the more appropriate move, as it will directly target the poor. To date, fuel subsidy for private cars and motorcycles is more enjoyed by the rich.
If the government raises fuel prices, he said, the state could save up to 60 percent of its budget. The subsidies can then be diverted to more productive projects like infrastructure development and poverty reduction.
Indonesia's spending on fuel subsidy, which reaches Rp300 trillion, has limited the state budget's movement. Therefore, increasing fuel prices is an absolute must.
"Our fuel subsidy is now very large, it is making our economy unhealthy," he said.
According to Chairul, the current government will meet the new administration to discuss about Indonesia's existing problems. Then time and date will be determined after the Constitutional Court makes a formal declaration of the official winner of the presidential election.
AYU WANDARI
