View Point: Trapped by his own Rp 300 trillion oil-trivia

Endy M. Bayuni, The Jakarta Post, Jakarta | Opinion | Sun, June 16 2013, 10:03 AM

Paper Edition | Page: 5

Here is a trivia question: If the government argues that domestic prices of fuel must be increased to bring the oil subsidy bill under control, how much money will it really save? Answer: Not a whole lot. One government official mentioned a figure representing a saving of Rp 26 trillion (US$2.63 billion) from the subsidy bill, which it is estimated will soar to Rp 300 trillion this year without the price increase, or one-fifth of total government spending.

The government has gone all out in recent weeks to drum up public support, arguing that the huge subsidy bill is no longer defensible, is threatening public finances and the nation’s economy, and calling it immoral
because the lion’s share goes to the undeserving rich.

What the government is not telling us is that, even if and when the price of subsidized gasoline goes up, nothing will really change. The subsidy bill will only decline a little, and the rich, with their gas-guzzling cars and brightly lit big houses, will still get the most out of it.

Which raises the next question: Why is the government going to the trouble of trying to convince the increasingly skeptical public when it is not going to make a significant dent on saving taxpayers’ money or even redressing the moral question of gross inequality?

Can we take the government seriously when it is not even serious about tackling the problem?

President Susilo Bambang Yudhoyono has announced that he will increase the price of fuel this month, overruling objections from students, labor unions and from some within his own government.

The government is almost certain to go for a token increase in the price of Premium gasoline, currently set at Rp 4,500 a liter, which is less than half the price of non-subsidized fuel. Current talks within the government are looking at the possibility of increasing the price of Premium, sold only by state-owned oil and gas company Pertamina, to Rp 6,000 a liter at the most, possibly only to Rp 5,500.

Yudhoyono wants the smaller increase on the pretext of protecting the poor. He is hoping that the House of Representatives will approve his proposal to allocate direct cash subsidies for the poor to help them cushion the impact of the fuel-price increase.

While the government has the power to increase the fuel price without the House’s nod, it faces stiff opposition in the House regarding the cash-subsidy plan.

For some, it smacks of electioneering as the nation prepares for the general election next year. They still remember how in the 2009 election, Yudhoyono’s Democratic Party campaigners told voters that the President had been behind the generous cash subsidy and that Yudhoyono was the only Indonesian president in history to reduce fuel prices.

You can fool all the political parties once, but you cannot fool all the political parties all the time.

If the Indonesian Democratic Party of Struggle (PDI-P) opposes the plan, it will be because it is playing the role of the main opposition party. But Yudhoyono faces defiance from the Islam-based Prosperous Justice Party (PKS), the only party in the coalition that openly opposes his plans both for the fuel-price increase and the cash subsidy.

The PKS has effectively but not formally quit the coalition as it no longer takes part in coalition meetings. The party, however, is leaving it to Yudhoyono to decide whether to keep or expel three PKS ministers in the Cabinet.

Even more troublesome is the opposition from students and labor unions. This week, student protests in Makassar, South Sulawesi, and Medan, North Sumatra, turned violent, giving us a taste of things to come if and when the government goes ahead with the price increase.

Yudhoyono, meanwhile, has the audacity to demand that others not politicize the fuel price issue, when clearly he has been the first and worst offender.

“With the fuel price adjustment, I don’t want to burden the people and the next government with larger debts,” wrote Yudhoyono, or rather his staff, on his personal Twitter account, @SBYudhoyono.

“On the provisional direct cash subsidy, President SBY warns political parties, the media and the public not to link it to politics. It is truly aimed at helping the poor,” read another SBY tweet.

And who would believe that?

There is no doubt that the domestic price of fuel, at half the global level, is immoral. The nation is burning precious hydrocarbon resources like there is no tomorrow (there is, by the way, for there are our children and grandchildren to think of). Indonesia is falling behind other countries in switching to less inexpensive and clean renewable energy resources because it has become addicted to cheap oil.

All the moral arguments for increasing the fuel prices, including the ones now presented by the government, are lost amid all the politicking, by almost everyone.

But, if anyone is looking for a scapegoat of how we ever got into this mess, then it is really the Yudhoyono government for politicizing it, inadvertently or not, and in the process for trivializing what has now become a Rp 300 trillion problem.

The writer is senior editor at The Jakarta Post.