Indonesia eyes to use fuel subsidy scheme to strengthen purchasing power

Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia has said that his ministry will proposed the Government a new fuel subsidy scheme that involves a combination of subsidised goods and direct cash transfer (BLT).

According to Bahlil, the hybrid model aims to strengthen purchasing power while ensuring that subsidies are effectively targeting those who truly need them.

He said he will discuss with Finance Minister to find budget for the programme before proposing it to the Indonesian President.

Previously, Bahlil had outlined several alternatives for better-targeting subsidies, especially since wealthier individuals have benefited from subsidised fuel.

One proposal is to shift subsidies to BLT, but he acknowledged this would impact sectors such as public transport and micro, small and medium enterprises (MSMEs), as well as public facilities like schools and hospitals, which currently rely on subsidies.

Bahlil also mentioned an alternative approach, which is to maintain subsidies for public facilities while allocating a portion of funds for BLT. Another option could involve adjusting prices on certain goods while still providing subsidies./.

VNA