Subsidized LPG Budget to Swell

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  • TEMPO.CO, Jakarta - Institute for Development of Economics and Finance (Indef) director Enny Sri Hartati said the price hike of Liquefied Petroleum Gas (LPG) will cause consumers to shift from buying 12-kg LPG to 3-kg LPG canisters. “This policy will cause trade off because the price difference is wide,” said Enny on Monday.

    Enny said the government should have increased the price of 3-kg LPG because it has never risen. However, the rise should be carried out gradually. “It’s useless if there’s a wide price difference between 3-kg LPG and 12-kg LPGs. It will only add more subsidy burden,” he said.

    The government has been optimistic that 12-kg consumers will not switch to 3-kg LPGs, but the number of middle-class people are is not that many. “All people use LPG. Those who have strong purchasing power will not switch, but the weak will switch to 3-kg LPGs,” he said.

    Coordinating Economic Minister Chairul Tanjung last week said he had accepted a request letter to increase 12-kg LPG price from PT Pertamina.

    “I’ve accepted it, but the price hike is the president’s authority,” he said on Thursday, adding that he must consult first to the president.