TEMPO.CO, Jakarta – Eko Putro Sandjojo, the chief of economy at the National Awakening Party (PKB) central executive board, said his party has agreed with government’s plan to increase fuel prices since only 20 percent of fuel subsidy is enjoyed by the rightful people.
“Fuel subsidy has missed its target,” Eko said on Thursday, November 6, 2014.
According to Eko, fuel subsidy has widened the welfare gap between the rich and the poor, since the rich people owning two or three cars enjoyed more fuel subsidy than poor ones. Eko added that the subsidy would be more beneficial if it was earmarked to build waterwheels or irrigation facilities.
Eko projected that the subsidy reallocation would boost economic growth by seven percent. According to Eko, a 1 percent economic growth could create about 500,000 new jobs as building infrastructure could have bigger impact on the economy.
Earlier, the government has held a meeting to discuss fuel price hike. Vice President Jusuf “JK" Kalla claimed the worst effect of fuel subsidy was fuel smuggling. JK also received reports that although fuel subsidy for fishermen had tripled, fish imports had increased.
“It means many fishermen sell subsidized fuel, rather than using it to catch fishes,” he said.