"The decision to divert fuel subsidy to productive sectors is aimed at creating funds that are used more effectively for all of Indonesia," he said at a press conference here on Monday.
On Monday night, the government raised the price of subsidized gasoline to Rp8,500 from Rp6,500 a liter and the price of subsidized diesel oil to Rp7,500 from Rp5,500 a liter.
The price of kerosene, however, remains unchanged at Rp2,500 a liter.
President Jokowi stated that the government needed sizable amount of funds to finance the development of infrastructure and improve education and health services.
These required funds were frequently unavailable because a considerable amount was spent on fuel subsidy, he noted.
The fuel price hike will be effective across the country from Tuesday, November 18.
Furthermore, the government will compensate the poor for the fuel price hike by providing them with Prosperous Family Cards, Indonesia Health Cards, and Indonesia Smart Cards.
"The move is aimed at maintaining the purchasing power of the people and encouraging them to carry out business undertakings in productive sectors," Jokowi explained.
He added that the government thoroughly deliberated the pros and cons of the fuel price hike before coming to a decision.(*)