Indonesia is recently facing a dilemma with regard to the increase of fuel price. The Government of Indonesia views that the policy to increase the fuel price is the most right act to cut the fuel subsidiary so that the subsidiary can be allocated to other sectors. However, as predicted before, the policy of increasing fuel price will result in the increase of basic needs price. Are there any other right solutions to prevent the long-term effect?
Considering the increase of the world oil price, the step taken by the government to cut the fuel subsidiary by increasing the fuel price is the right thing. The current world oil price is about US$100 per barrel. Surely, the increase of fuel price will stimulate the increase of basic needs price. The policy will surely be effective in short-term since the domestic fuel consumption still increase. Therefore, the subsidiary for fuel will keep increase.
Recently, the government of Indonesia cannot decrease the domestic fuel consumption. In fact, the fuel consumption increases from year to year. The increase of domestic fuel consumption results from the increasing number of motor vehicle in Indonesia. In one year, the sale of cars in Indonesia can reach one million units while for motor cycle the number can be much higher. Consequently, the increase of domestic fuel consumption is unavoidable.
In the future, the government shall take strict acts to decrease in domestic fuel consumption. One of them is limiting the number of motor vehicle sale or applying progressive tax rate to value-added tax of motor vehicle. It is great if the government of Indonesia is brave enough to limit the number of motor vehicle sale, particularly private vehicle.
“This is just an imagination. I will be give great appreciation if the government has desire to follow up this simple idea.”
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