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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What is the main goal of Indonesia’s new fuel subsidy plan?
## Interview with an Analyst on Indonesia’s New Fuel Subsidy Plan
**Host:** Welcome back to the show. Today, we’re talking about Indonesia’s new fuel subsidy plan, which aims to make the distribution of subsidies fairer and more efficient. Joining me today is Alex Reed, an economist who specializes in Southeast Asian economic policies. Welcome to the show.
**Alex Reed:** Thank you for having me.
**Host:** So, Indonesia has been facing challenges with its fuel subsidy program for some time now. Can you explain the issue and what the new plan aims to address?
**Alex Reed:** That’s right. For years, Indonesia has used a blanket approach to fuel subsidies, meaning everyone benefited regardless of their income or need. This resulted in significant waste and inefficiency. Wealthier individuals, who could afford higher fuel prices, still received subsidies intended for those struggling to make ends meet. The new plan seeks to rectify this by targeting subsidies towards specific groups like low-income households, MSMEs, and essential sectors like public transportation and agriculture. [[1](https://mediaindonesia.com/newsread/550450/new-fuel-subsidy-scheme)
**Host:** This sounds like a significant shift in policy. What are some of the key changes we can expect to see?
**Alex Reed:** There are several notable changes. Firstly, the government will be using data from the Integrated Social Welfare Data (DTKS) to identify poor and vulnerable groups eligible for fuel subsidies. This ensures that assistance reaches those who genuinely need it. Secondly, specific industry sectors deemed essential for national economic stability, like food security and basic commodities, will receive focused subsidies to maintain affordable prices. Lastly, the government will leverage technology to distribute subsidies more transparently and efficiently, minimizing opportunities for corruption or misuse.
**Host:** Interesting. Do you see any potential challenges with this new approach?
**Alex Reed:** Every significant policy change comes with its challenges.
Ensuring accurate targeting based on DTKS data is crucial. The government needs to constantly update this data to reflect changing economic circumstances. Furthermore, ensuring transparency and accountability in the disbursement of subsidies will be paramount to maintaining public trust in the system.
**Host:**
what are your thoughts on the potential impact of this new scheme on the Indonesian economy?
**Alex Reed:** I believe this targeted approach has the potential to significantly benefit the Indonesian economy.
By directing subsidies towards productive sectors and vulnerable populations, the government can stimulate economic growth and reduce inequality. This, in turn, could lead to increased investment, job creation, and improved living standards for millions of Indonesians.
**Host:** Thank you so much for sharing your insights with us today. Alex Reed, this has been a very enlightening discussion.
