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 objectives of Indonesia’s new fuel subsidy scheme?
## Interview with Economist on Indonesia’s New Fuel Subsidy Scheme
**Host:** Welcome back to the show. Today we’re discussing Indonesia’s new fuel subsidy scheme, which aims to target assistance to those who truly need it while reducing waste. To shed some light on this, we have with us esteemed economist Dr. Budiono. Dr. Budiono, thanks for joining us.
**Dr. Budiono:** It’s my pleasure to be here.
**Host:** So, Dr. Budiono, can you tell us about the key changes in this new scheme? What are the main objectives?
**Dr. Budiono:** The government is shifting away from a blanket subsidy approach, where everyone gets the same benefit regardless of their need. Instead, the new scheme aims to be more targeted and efficient. The main goal is to ensure that limited funds are directed towards those who truly rely on fuel subsidies for their livelihood and to minimize abuse.
**Host:** Which groups will benefit from this targeted approach?
**Dr. Budiono:** According to the information released, the government plans to focus on five key categories:
Firstly, **low-income families** registered in the Integrated Social Welfare Data (DTKS) system will be prioritized. This ensures that those struggling financially receive support for their essential needs.
Secondly, **micro, small and medium enterprises (MSMEs)** will also receive assistance. This sector is vital for the economy and often vulnerable to fuel price fluctuations, so targeted subsidies can help them thrive.
Thirdly, **public transportation** will be supported to keep fares affordable for the general public.
Fourth, **farmers and fishermen** who rely on fuel for their operations are also included. Supporting these sectors is crucial for food security and economic stability.
certain **industries** involved in food security, basic commodity production, and other essential sectors will receive subsidies to ensure the continuity of these vital operations.
**Host:** This sounds like a well-thought-out plan. What about the implementation? How will the government ensure that these subsidies reach the intended beneficiaries?
**Dr. Budiono:** The government is working on leveraging technology to streamline the process and prevent misuse. This could involve using digital platforms for registration and distribution, ensuring only eligible recipients receive the benefits.
**Host:** Any potential challenges you foresee with this new scheme?
**Dr. Budiono:** Any significant change in policy faces its share of challenges. Ensuring accurate data in the DTKS system and reliable digital infrastructure are crucial for successful implementation.
**Host:** Dr. Budiono, thank you so much for sharing your insights on this important new scheme. This clearly illustrates the government’s commitment to providing targeted assistance while promoting efficient resource utilization.
**Dr. Budiono:** You are welcome. I believe it’s a step towards a more well-managed and equitable fuel subsidy system.