"Indonesia is an economic socialist country."Jakarta (ANTARA News) - The Institute for Economics and Finance (INDEF) has recommended that the government raise subsidized fuel prices to improve its trade balance and primary deficit in the state budget.
"Indonesia`s fuel oil price is the lowest and subsidy is the highest. Indonesia is an economic socialist country," INDEF economist Didik J Rachbini satirically said in a press conference here on Tuesday.
He was giving a press conference in connection with "INDEF`s Quarters Evaluation: Double Interrelation and Inflation."
Besides Didik, another INDEF economist Eko Listiyanto on the occasion explained that Indonesia`s trade balance experienced a deficit in 2012 and early in 2013 because of deficit pressures from increasing oil imports.
Eko said refined oil trade balance had turned "red" because the deficit had reached 24.5 billion US dollars.
He said that the high refined oil imports were an indication of declining oil production at home, while consumption was on the rise.
"Refined oil dominates the total oil and gas imports. In 2012, total oil and gas imports stood at 42.56 billion US dollars and refined oil accounted for 28.68 billion US dollars. In the January - February 2013, total oil and gas imports were recorded at 7.61 billion US dollars. Refined oil accounted for 5.07 billion US dollars," he said.
The other INDEF economist, Prof. Ina Primiana, said there was whimsicality in the high refined oil imports. Indonesia`s economic growth was high, reaching the second highest in Asia, but subsidized fuel oil consumption also increased.
"Economic growth is proof of industrial growth. Industry is growing but subsidized fuel oil consumption did not decline. It means that industry also enjoyed the subsidy," he said.
Ina is afraid that the efforts by the government to restrict subsidized fuel consumption would not be effective in preventing leakage. Because industry which should not use subsidized fuel turned out to have been using it.
Enny Sri Hartati, another INDEF economist, said that of the various steps that could be taken by the government with regard to subsidized fuel oil, the price increase would be the most ideal and correct step.
"The rise in the subsidized fuel prices will directly reduce the subsidy burden. Economically, this is the most ideal step but politically, it is not a good choice," she said.
On the government`s plan to provide octane 90 premium gasoline for private cars with a price higher than the subsidized premium but lower than that of pertamax, Enny said it was not easy to implement in the field.
"Price differentiation should be carried out with separation of the market. For example, airplanes can only use aircraft fuel (avtur) so that it would be impossible for them to use premium. Thus, separation of markets for private cars and public vehicles is difficult to be implemented in the field," she said.
(Uu.A014/S012)
Editor: Priyambodo RH
Copyright © ANTARA 2013
