Economist: Jokowi Should Fully Withdraw All Fuel Subsidy

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  • TEMPO.CO, Jakarta - Economy expert from University of Indonesia Lana Soelistianingsih stated that she supported the fuel price hike policy. She even dare to said that President Joko Widodo should fully withdraw the fuel subsidy instead of leaving Rp700 for it. However, Lana said that the subsidy should then be allocated to the proper target.

    Lana added that Jokowi can propose removing fuel subsidy in Revised State Budget Draft (RAPBNP) 2015, "as long as he has a string argument."

    However, Lana said that it will take a lot of guts to totally remove fuel subsidy, as the policy might be deemed not pro-people. She added that fuel subsidy of Rp267 trillion can be more effective if allocated in other sectors, such as infrastructure and social welfare.

    As for inflation following fuel price hike, Lana said that it will not last very long, merely 2 to 3 months. After that, she claimed that "inflation will go on to be more realistic."