As if eating simalakama fruit, would Indonesian goverment persist in raising fuel price? Or it is merely an issue diversion?

It is maundy thursday when I am writing this writing. Days before I come up with the idea of writing this issue, a lot of my friends joining student executive board (read-BEM) as well as people all around Jakarta rallied against fuel price hike. Having encountered a massive mass rally, conclusively house of representative put off the fuel price hike. However, it does not even unravel the hornet’s nest straightaway. In all likelihood, the fuel price hike will be re-emerging in six months later, the final decision highly banks upon the price of ICP (Indonesian Crude Price) along these six months. Through this writing, I attempt to take a closer look at what is happening with the issue and maybe, what is behind it.

At the very least, there are three centres of gravity backing up reasons why people doing such rally argue about the fuel price hike. Firstly, they affirm, that, by having no both social security net and alternative energy resource, accordingly it is, without question, the goverment’s charge to fully subsidize fuel price for people. The fuel subsidies, in turn, become considerable in order to attenuate the aftermath of international oil price to the domestic market as well as secure the accessibility of fuel price can be touched by indigent people. Secondly, they utter how fuel price alteration would bring what so-called ‘trickle down effect’. Economically speaking, it amounts to the multiplier effect concept. Either proliferation or decline of the fuel price will surely put such consecutive alteration on another commodities price, particularly food commodity needed most by the indigent people. They, in the same way, convey that, although there will always be likelihood of people’s natural adjustment and adaptation to the new fuel price (through what so-called Smith’s ‘invisible hand’ concept), still it does matter to the social repercussion it would produce. They argue on how many students would end up with the cessation of schoolwork and how this fuel price hike would elevate ‘bad nutrition’ case in Indonesia. Thirdly, what so-called ephemeral society cash transfer (read-BLSM/bantuan langsung sementara masyarakat) does not unravel the quintessence of the issue. In fact, this cash transfer would encounter a lot of hindrances, they argue. On the first place, goverment presumes too much, that, this Rp 150k permonth would be sufficient for those who need it. It is conventional economic calculation, my friend said. Moreover,  goverment seems like pass over other fact named social problem as well as political one. Not only this ephemeral society cash transfer would be ‘yummy bread’ for corruptors through what so-called bureaucracy, but also such cash transfer, without question, would be close to the misuse of it. We got the point that there are a lot of needs should be done by people for their life, and even it is much more complicated for the indigent people who are marginalized most by goverment. It makes sense then if those people doing rally have always thought that this cash transfer would not be used in what it should be used, something like paying their arrears, gambling, and others.  

With all due respect, having contemplated these reasons above,  I thought I had no reason to differ with them on this issue. However, to some extent, we do need to take a really close look at those three reasons, since what I am thinking about, is that I found some problems still remained after all. Let’s begin by taking a look at what they ask for, namely social safety net and alternative power resource.  Ideally, it is right that both prerequisites should be done first before having the fuel price hike. Yet in some ways, both prerequisites would take time, and nobody could expect much on it. Social safety net consisting both education and health insurance, for instance, is surely a big deal. First of all, we got to know and consider how many people reside in this archipelago. In fact, we are definitely in big five most populous country on the planet, and the fact speak for themselves. Objectively speaking, how dear it could be, plus nobody could ever warrant you, that, it would be succeeded. Even, looking at what a population we have, the social safety net made by goverment  would be more expensive than the budget for subsized fuel itself. Second of all, social safety net remains a lot of questions, even in developed countries where it was born for the first time. The issue of its best mechanism, its regulation, and its aftermath toward the national economic stability are some questions remained. Even those developed countries are still on their way to find the best mechanism for it. In addition, the second issue called the urgency of alternative power resource should be accosted wisely. Before going too far on talking about it, let’s take a simple example to deal with. In order to have  such alternative power resources effectively worked, we need a lot of things, something like power stations, professional technicians, and other stuffs. Yet one of the most major requirement is the society itself. Have you done what so-called ‘go green’ activity? Have you ridden your bycicle to the campus or office? Have you prefered going to somewhere by bus to going by your private BMW car? Then, how can we turn into alternative power resource if we are still banking on fuel tightly and that much? In short, my point lies in my overview that we got to change our society first before considering about the alternative power resource. I think that we need to look back on what we have done so far, and think rationally whether what we ask for would be rational or not.

I myself personally acquiesce in the idea of raising fuel price. This acquiescence is underpinned by my thought, that we can not bank upon goverment fuel subsidies all the time. It is right, I admit it, that the fuel price hike would bring ‘trickle down effect’ and surely it amounts to bring more people in poorness. Yet, at the very least there are two centres of gravity why do I think it is needed to raise the fuel price. Firstly, we got to wake up and encounter the fact that goverment fuel subsidies are relished by more the moneyed classes than any other indigent classes. It is, moreover, underpinned by the fact that the moneyed classes own more cars and other vehicles than the indigent classes. Thus, it was felt that the goverment’s goal — that, the fuel subsidies would help the indigent classes — has been misused. Frankly said, I mean to say that the raise of fuel price is needed to attenuate this phenomenon. If it is affirmed that the raise of fuel price would demolish a thousand lower middle economic activities (considering the fuel price hike would bring what so-called ‘trickle down effect’), in the words of my lecturer, it would be much better if the goverment toughen the policy regarding microeconomic business, like microcredit loans (read-Kredit Usaha Rakyat). Let’s assume that the fuel price hike passed and we could save a lot for the national budget, what I mean to say here is these amount of money would be more ‘meaningful’ to be used to peter out the interest rates of this microcredit loans, and in the end, this microcredit loans would be much cheaper for its interest rates. Why do I use term ‘meaningful’? Since this policy does not spoil the people, it needs an effort from them to face the reality. At the very least, this policy, in my opinion, would unravel two of our problems here, which are first, it would help the lower middle economic activities to strive when the raise of fuel price passed, and second, it would nourish a good enterpreneurship among indonesian people.

Secondly, I count on my thought that by saving a lot in the national budget from this fuel price hike, these money would be earmarked for other purposes, something like education and health. I am sure, you would be mad after reading this normative thing since what I write about education and health sounds really classic. I admit that, this money allocation would be hard to be realized since this country is the paradise for corruption. Yet, what I attempt to reveal here is that we will never make a ‘better move’ if we are staying this way. Are we going to always bank upon fuel subsidies all the time? No, of course not. There will be the time when the price would be raised and when the time comes, we have to be ready.

However, looking back at what has happened in Indonesia, I think now is not the right time to raise fuel price hike. Well, let me emphasize my stance here. I personally agree on the issue of the raise of fuel price in order to save the national budge from collapse, yet I think it is too soon and too abrupt. Even if the raise of fuel price passed, the price difference is too high. It sounds really shallow of goverment to act this way since, of course,  it would bring a ‘torpedo’ for them. Once more I said, this decision is too soon, too abrupt, and too high in price difference. Having disputed the issue with my friends, we agree on two things what the goverment ought to do in the effort of postponing this fuel price hike. Firstly, in the short run, goverment must take a belligerent move by cutting other post’s budgeting which takes much money, like official’s sallary. Secondly, in the long run, my friends said that the goverment ought to raise the tax revenues from the gross domestic bruto (DGP). The second option seems like really risky since, economically speaking, tax change would bring a lot changes in the whole economic activities. Yet, we have no other option as yet. One thing remained in my mind is that the goverment ought to raise tha tax in a ‘smooth’ way, what I mean to say is that the goverment must be very sure that the tax change they would decide would not make a big change in the whole economic activities, like 1-2% peryear.

 At the end of this writing, believe it or not, one thing which always haunts me is whether this fuel price hike plan is merely an issue diversion, which we all know it is one of the best way to take all attention on this issue only (by forgeting what is happening with other huge issues). As what I have revealed above that this issue is a bit shallow (the price difference, the timing and others) so on behalf of my curiosity and the democracy principle, I am asking what is behind this all. I personally have no right to judge this issue this way, yet considering a lot of huge issues still remained in uncertainty, I think we do need to think clearly and critically on what is happening here. We’d better keep paying attention on other issues without loosing our attention on this one. I am not going to reveal directly what I mean to say here, yet I do hope you would understand that, as what Machiavelli said, “the ruler need not hesitate himself to deceive other rulers if he found this was required in the interests of his own state,... any means is allowed to achieve the interest of his” I close this writing by challenging you to guess who is the ruler and what interest is it?

Happy guessing!