Majority of Indonesia’s fuel subsidy goes to the middle class and rich

Indonesia’s Coordinating Minister for Economic Affairs, Hatta Rajasa, said that almost 70 % of the Rp158 trillion (US$17.39 million) in fuel subsidy has gone to the middle and upper-class, and a mere 30% has benefitted low-income families. “Our subsidy in 2012 accounts for 20% of the state budget, which means that if the state budget amounts to Rp1,400 trillion (US$154.15 million), then our subsidy will be more than Rp200 trillion (US$22 billion), ” the minister said. “The challenge now is that we must change this structure to protect the poor. We must give them proper subsidies so that they are useful to them.” The minister revealed that Rp25.6 trillion (US$2.75 billion) in funds will be allocated to those who will be adversely affected by the continuing fuel oil price hike. Of the total amount, Rp5 trillion (US$550.59 million) will be allocated to public transport so that fare hikes won’t be too high; Rp3.4 trillion (US$374.40 million) will be given as scholarships for poor students and Rp5.3 trillion (US$589.14 million) will go towards rice subsidy. (March 14, 2012)