Jokowi: Fuel Subsidy Cut Savings Could Fund Papua Rail Project

TEMPO.CO, Jakarta - Recently, the government has decided to raise the price of subsidised fuels marketed outside the island of Java, Madura, and Bali – through a decree that came into effect on March 28, 2015. The prices of Premium and Solar fuels were raised by Rp500 per litre to Rp7,300 and Rp6,900 per litre, respectively.

This increase occurred because the government is slowly decreasing the amount it allots for fuel subsidies, which gives rise to one important question - where has the money gone to?

President Joko 'Jokowi' Widodo said that the subsidies have now been diverted to help fund the expansion of other more productive sectors. "This includes our maritime and agricultural industries, the funding for our infrastructure projects, as well as the procurement and the development of Indonesia's transportation sector," said President Jokowi through his address at an event at Al-Akbar Mosque in Surabaya on Friday evening, April 18, 2015.

Jokowi said that the amount spent on subsidies are way to large as it amounts to Rp300 trillion annually. "Think about it, we spent Rp300 trillion per year just to burn fuel. In 10 years time, that amount would add up to Rp3,000 trillion," he said.

"Comparatively speaking, it would only cost Rp360 trillion to build a railway network that spans all the way to Papua," continued Widodo.

Jokowi also took the time to take a jab on his predecessors, whom he deems as mere populists for their refusal to divert fuel subsidies to other more productive sectors.

"Many have warned me that my decision would make me highly unpopular - but it is a risk that I am willing to take because such risk comes with every policy decision," added Jokowi, who finished by saying that the road ahead would be tougher, especially given the current economic slowdown, and taking into account the continuous depreciation of the Rupiah against the US Dollar.

EDWIN FAJERIAL