Reducing the Subsidy for Fuel

What Government Must Do

Oil in Indonesia was very abundant is now very rare and Indonesian debt has jumped significantly for almost 300 billion US dollars. Many budget of state budget spent for fuel subsidy which turns wrong target and used inefficiently by the public. Whether to be left away without action? Will Indonesia can survive in the future from the competition all other advanced country?

Reduce subsidies for fuel is sufficient to conserve supplies of petroleum in Indonesia while organizing the life of the country. If we could immediately reduce the amount of spending and increase receipts, then the debt could be reduced step by step and the people's welfare will be increased. Scarcity of petroleum also can cause the increasing of world oil prices. This led the government to rethink in reviewing the state budget. The rise in world oil prices resulting in swelling of the state budget. Whether the government would add debt again for that? Then the best way that can be taken is by reducing the fuel subsidies.

With the decline of fuel subsidies, many parties will feel as aggrieved because they must buy non-subsidy fuel. However, this step is performed by the government to maintain and build the future of Indonesia to be better. This will indirectly reduce the wasteful nature of use of fuel by society, and it also can be a way for the creation of alternative energy sources other than petroleum. Indonesia got 1.4% of world gas reserves, the world's coal reserves of 3.1% and 40% of the world's geothermal reserves. With those potentials, the government should think to optimize the use of alternative fuels such as gas, coal, and geothermal.

This optimization can be preceded by the creation of supporting infrastructure and preparation of competent human resources in the management of alternative fuels by looking the growth of Indonesia are still in low level. There are many Indonesian people are still lived in poverty and far from the prosperity. Those are can be the main reasons for the government to reduce the budget of subsidies and can allocate it to other needs.

Fuel can be said as the promoters of Indonesian economic growth. The economy movement especially in industry, agriculture, fishery even mining moved by fuel. Production, distribution until consumption needs fuel. But spending subsidy, especially oil, always burden the state budget, and make fiscal space being limited. Government will need adequate fiscal space in order to have the opportunity to carry out a work program that encourages economic growth. Hence, fiscal policy more precedence to lead to the economy progress.