Minister Explains Benefits of Fuel Price Increase

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  • TEMPO.CO, Jakarta - Finance Minister Bambang Brodjonegoro explained to investors about the government’s decision to increase the price of subsidized fuel during a discussion titled "Indonesia Investment Forum 2014", which was held by Euromoney Conference.

    Bambang said that the price increase occurred because for the last five years, there had been overspending in subsidy budget. "The accumulation of subsidy budget reached Rp 800 trillion," he said at the Grand Hyatt Hotel, Jakarta, on Wednesday, November 26, 2014.

    According to Bambang, if the money is spent for basic infrastructure development and healthcare, the people could immediately reap the benefit. All this time, 70 percent of subsidized fuel consumers are private car owners. The government aims to shift the budget from the consumptive sector to the productive sector.

    To maintain the purchasing power of underprivileged people, Bambang said that the government would give direct financial assistance as compensation. The aid will be distributed to 15.5 million families; each will get Rp 200,000 per month. The fund disbursement can be done until December 2, 2014.

    President Joko Widodo announced an increase in subsidized fuel price, which took effect November 18, 2014. With the policy, the price of Premium was increased from Rp 6,500 to Rp 8,500 per liter, while the price of solar became Rp 7,500 per liter from the initial Rp 5,500.