Indonesia Plans Hybrid Subsidy Approach
Indonesia is implementing a new fuel subsidy scheme that combines direct cash transfers (BLT) with subsidized goods to ensure that aid reaches those who truly need it.
Energy and Mineral Resources Minister Bahlil Lahadalia announced the impending revamp, highlighting a desire to strengthen purchasing power while targeting subsidies more effectively. While the exact details are yet to be publicly revealed, President Prabowo Subianto is expected to announce the complete plan soon.
Planning Stage Underway
“Later, God willing, with us, President Prabowo will announce it. But the scheme is most likely blending subsidized goods and BLT,” Bahlil stated. He declined specifics on a launch date,
adding, “If asked when it will be announced, we will see a good day and date. After this, I will report to the finance minister for the initial stage, maybe we will push first for a buffer. The BLT will run first, ” Bahlil elaborated.
Targeting Public Transportation and Avoiding Guesswork
Bahlil stressed that the goal wasn’t to do away with subsidies. Rather, it was about enhancing their effectiveness and ensuring they reach the intended beneficiaries.
He clarified that only vehicles with yellow license plates, signifying public transportation, would remain eligible for subsidized fuel. “These vehicles, like our ‘angkot,’” he said, using an abbreviation for public minivans, “Transportation costs should not increase.”
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– Will the shift towards a hybrid subsidy model accelerate or hinder Indonesia’s transition to cleaner energy sources, considering the ongoing debate surrounding the sustainability of fossil fuel subsidies?
## Indonesia’s Subsidy Shift: Reaching Those in Need?
**Host:** Welcome back to “Insight Indonesia.” Today, we’re talking about the government’s new plan to revamp fuel subsidies. Joining us is energy analyst, Dr. Anita Permata, to break down what this means for Indonesians.
Dr. Permata, thanks for being with us.
**Dr. Permata:** It’s my pleasure to be here.
**Host:** Let’s jump right in. Indonesia is moving towards a hybrid subsidy approach, combining direct cash transfers with subsidized goods. Can you elaborate on what this entails?
**Dr. Permata:** Essentially, instead of solely relying on blanket fuel subsidies that benefit everyone, the government is aiming for a more targeted approach.
This new scheme will utilize Indonesia’s existing “BLT” program, which provides direct cash transfers to low-income households, alongside continued subsidies on specific essential goods.
**Host:** This sounds like a step towards ensuring subsidies reach those who need them most. Are there concerns about its effectiveness?
**Dr. Permata:** Of course, any major policy shift comes with its own set of challenges. There are concerns about the logistical complexities of accurately identifying eligible recipients and ensuring
the smooth implementation of the hybrid system. [[1](https://thediplomat.com/2024/02/indonesias-fossil-fuel-subsidies-threaten-its-energy-transition/)]highlights the ongoing debate around the long-term sustainability of fossil fuel subsidies in Indonesia, especially in light of its energy transition goals.
**Host:** Right, that article mentions Indonesia’s ambition to transition to cleaner energy sources. Could this new subsidy model help or hinder that objective?
**Dr. Permata:** That’s a crucial question. A well-designed hybrid system could potentially free up resources to invest in renewable energy technologies. However, much depends on the details of the program and whether simultaneous efforts are made to disincentivize fossil fuel consumption.
**Host:** We’ll have to wait and see how this plays out. Dr. Permata, thank you for sharing your insights on this important development.
**Dr. Permata:** Thank you for having me.