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 are the main challenges Dr. Wicaksono anticipates in implementing the new fuel subsidy scheme in Indonesia?
## Interview with Dr. Adi Wicaksono, Energy Policy Analyst
**Host:** Joining us today is Dr. Adi Wicaksono, a renowned energy policy analyst, to discuss Indonesia’s new fuel subsidy scheme. Dr. Wicaksono, welcome to the programme.
**Dr. Wicaksono:** Thank you for having me.
**Host:** Indonesia’s government is transitioning to a new way of distributing fuel subsidies. Can you tell us about the main goals of this new scheme?
**Dr. Wicaksono:** Absolutely. The primary goals are twofold: to make these subsidies more targeted and to reduce waste. Current fuel subsidies are often criticized as being inefficient and benefiting those who don’t necessarily need them. This new scheme aims to focus these resources on those who truly need them, like low-income families, small businesses, and essential industries [[1](https://www.iisd.org/publications/report/citizens-guide-energy-subsidies-indonesia)].
**Host:** This sounds like a significant shift. What are some key elements of this new plan?
**Dr. Wicaksono:** The government plans to prioritize subsidies for five main groups. First, low-income families registered in the Integrated Social Welfare Data (DTKS). Second, Micro, Small, and Medium Enterprises (MSMEs), recognizing their vulnerability to energy price changes. Third, public transport operators, aiming for more affordable fares. Fourth, farmers and fishermen who rely on fuel for their livelihoods. And specific industries crucial for food security and basic commodity production [[1](https://www.iisd.org/publications/report/citizens-guide-energy-subsidies-indonesia)].
**Host:** This seems like a very data-driven approach. Will technology play a role in implementing this new scheme?
**Dr. Wicaksono:** Yes, the government plans to leverage technology heavily. This could involve using digital platforms to verify eligibility for subsidies, streamline distribution, and prevent fraud. We can expect to see increased reliance on online registration and mobile payment systems.
**Host:** These changes sound like a positive step towards a fairer and more efficient system. Do you foresee any potential challenges in implementing this new scheme?
**Dr. Wicaksono:** Of course, with any major policy shift, challenges are inevitable. Ensuring accurate data collection and updating the DTKS database will be crucial. The government needs to invest in robust technological infrastructure and address any potential digital divide issues to guarantee smooth implementation.
**Host:** Dr. Adi Wicaksono, thank you for sharing your insights on this important topic.
**Dr. Wicaksono:** My pleasure.