Fuel Price Must be Increased Immediately, Official Says

TEMPO.CO, Jakarta - Executive Director of Indonesian Resource Studies Marwan Batubara, suggested that the increase of subsidized fuel prices should be done in one stage. "The one stage price increase will help Joko Widodo's government to take care of issues such as the increase in inflation rates early on, instead of raising the price in several stages," he said to Tempo on Wednesday, August 20, 2014.

According to Marwan, the increase of subsidized fuel price can no longer be postponed because of the deficit in Indonesia's trade balance, which is due to the extremely high import of oil. The Central Statistics Agency recorded that Indonesia’s oil and gas import value during the first semester of 2014 has reached US$ 3.3 billion. "There is no other way but to increase fuel price in the midst of the high energy consumption. If they want to drill new oil sources, it will be time consuming, risky and requires a lot of money," he said.

Marwan asserted that Joko Widodo should raise the price of fuel as soon as he is officially inaugurated as the new president. He also admitted that increasing fuel price is not a policy favored by the people. "But it must be done and the government should give a logical explanation to the people why it must be done and compensate for it with other programs in the education, infrastructure and health sector as a result of the fuel subsidy cuts," he said.

The price of Premium fuel and diesel can reach its economic price point, which means that the selling price will be close to the global oil price. "The Rp 10,000 [around US$ 0.85] price tag for Premium and diesel is considered proper as the new price," he said.

RAYMUNDUS RIKANG R.W