THE Indonesian government is currently designing and implementing a new scheme for fuel oil (BBM) subsidies to ensure that this assistance is more targeted and reduces waste that has occurred so far.
In this new scheme, fuel subsidies will no longer be given evenly, but will be more focused on certain groups of people and sectors that really need them.
The new fuel subsidy scheme aims to ease the burden on low-income communities and optimize the use of subsidy funds for productive sectors.
This step was taken because previously it was felt that fuel subsidies were not on target and there was potential for abuse by groups who did not need the assistance.
Therefore, the government through the Ministry of Energy and Mineral Resources (ESDM) and the Ministry of Social Affairs (Kemensos) is introducing a more measurable mechanism.
The following are several categories of fuel subsidy recipients based on the new scheme that will be implemented:
1. Poor and Vulnerable Communities
The government will prioritize providing fuel subsidies to the people registered in Integrated Social Welfare Data (DTKS). This group consists of poor families who have low incomes and are vulnerable to poverty. Distribution of subsidies to them is expected to help them reduce their burden of expenses, especially in transportation and household energy costs.
2. Micro, Small and Medium Enterprises (MSME) Group
MSMEs are a sector that is very vulnerable to fluctuations in energy prices, especially fuel. Therefore, this business group will receive more attention in the new subsidy scheme. The government hopes that by providing subsidies to MSMEs, small businesses can maintain the continuity of their businesses without having to be burdened with high energy costs.
3. Public Transportation
Public transportation such as buses, public transportation and motorbike taxis are often people’s mainstay in daily mobility. With more focused fuel subsidies, it is hoped that public transportation costs will be more affordable. This will certainly have a positive impact on people who depend on public transportation for their activities.
4. Farmers and Fishermen
Farmer and fisherman groups who need fuel for agricultural and fishery operations will also be the main recipients of this subsidy. Many farmers use fuel to operate agricultural machinery, while fishermen need fuel for boats and fishing gear. With subsidies, it is hoped that agricultural and fishery products will be more affordable and improve the welfare of farmers and fishermen.
5. Specific Industries
Certain industrial sectors, such as those involved in food security, production of basic commodities, and other sectors that support people’s basic needs, will also receive fuel subsidies. The government considers these sectors to be very important for the continuity of the national economy, so that the subsidies provided can increase competitiveness and reduce production costs.
Use of Technology for Distribution of Subsidies
The government also plans to use technology to optimize the distribution of fuel subsidies. One of the proposed mechanisms is to use special applications and cards that make it easier to monitor subsidy recipients.
Through this system, the government can more easily verify who is entitled to receive subsidies and avoid potential abuse that has often occurred in the past.
In addition, quota restrictions for each type of fuel will also be implemented to ensure that only those who are entitled to subsidies receive them. In this way, it is hoped that there will be no more misuse or waste of subsidies that are not well targeted.
The implementation of the new fuel subsidy scheme certainly faces challenges, especially in terms of verifying accurate recipient data and transparency in distribution.
However, if implemented well, this scheme is expected to increase the efficiency of using the subsidy budget and provide greater benefits for people in need.
The government hopes that with well-targeted subsidies, sectors that depend on fuel can continue to run at more affordable costs, while poor people will no longer be burdened by ever-increasing fuel prices. (Z-10)
Source:
- Ministry of Energy and Mineral Resources (ESDM). (2024). New Fuel Subsidy Scheme and Its Distribution. Jakarta: Ministry of Energy and Mineral Resources.
- Ministry of Social Affairs (Kemensos). (2024). Integrated Social Welfare Data (DTKS). Jakarta: Ministry of Social Affairs.
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How will the new fuel subsidy scheme ensure that subsidies reach the intended recipients and prevent misuse?
## Interview with Government Official on New Fuel Subsidy Scheme
**Host:** Welcome back to the program. Today we’re discussing the Indonesian government’s new plan to reform their fuel subsidy program. Joining us is [Name], [Title] at the Ministry of Energy and Mineral Resources. [Name], thanks for being here.
**Alex Reed:** Thanks for having me.
**Host:** So, let’s talk about these changes. The old system was criticized for being broad and inefficient. Can you tell us about the need for this new approach?
**Alex Reed:** Absolutely. As you mentioned, the previous system was not very targeted. Many people who didn’t need the subsidy were benefiting from it, while others who truly depended on it were struggling. [[1](https://www.iisd.org/publications/report/citizens-guide-energy-subsidies-indonesia)]This led to inefficient spending and wasted resources.
Our goal with this new scheme is to ensure that fuel subsidies directly reach those who need them most – low-income families, MSMEs, and vital sectors like agriculture and public transportation. By focusing on these groups, we aim to ease the burden on vulnerable communities and stimulate productive economic activity.
**Host:** This sounds promising. Can you elaborate on how the new system will work? Who are the key beneficiaries you mentioned?
**Alex Reed:** We’ve outlined five key categories that will benefit most from the new scheme:
* **Poor and Vulnerable Communities:** Those registered in the Integrated Social Welfare Data (DTKS) will be prioritized. This ensures that the poorest families directly benefit from the subsidy and can afford their daily needs.
* **Micro, Small and Medium Enterprises (MSMEs):** Small businesses are the backbone of our economy, and they are particularly vulnerable to fluctuations in fuel prices. We don’t want soaring fuel costs to stifle their growth.
* **Public Transportation:** Affordable public transportation is crucial for people to access work, education, and other essential services. Targeted fuel subsidies will help ensure that fares remain reasonable for all.
* **Farmers and Fishermen:** These groups rely heavily on fuel for their operations. Subsidies will help them keep costs down, leading to more affordable food products for consumers.
* **Specific Industries:** Certain industries, like those involved in food security or basic commodity production, will also receive support. These sectors are vital for the national economy and social well-being.
**Host:** This seems like a much more targeted and equitable approach. How will you ensure that these subsidies actually reach the intended recipients and aren’t misused?
**Alex Reed:** That’s a crucial point. We’re implementing a more transparent and measurable system, leveraging technology to ensure accountability. This might include digital platforms for subsidy registration and distribution, along with robust monitoring mechanisms to prevent fraud and abuse.
**Host:** Thank you for shedding light on these important changes, [Name]. We appreciate your time and insight.
