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Fuel Subsidy Raises Consumption of the Lower Class

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JAKARTA – Chairman of the Executive Board of the Islamic Student Association (PB HMI) in the Energy, Oil and Gas and Minerba (PEMM) Development Sector, Muhamad Ikram views that the fuel price adjustment is a form of the government’s alignment with the interests of the people.

Ikram considers that the fuel subsidy that has been implemented so far, is not well targeted. This is because the use of subsidized fuel has been dominated by the wealthy.

“In the past, when the government raised the price of Pertamax, Pertamax users used Pertalite fuel. This is where we see that there is an attempt to take the economic rights of the lower classes and we think it is not right on target,” he told reporters.

He also stated that it is more appropriate to give subsidies to people and not to commodities. “For example, the human subsidy will increase the people’s ability and purchasing power,” he concluded.

According to him, the government allocates the state budget for things that are in direct contact with the needs of the community, such as education, infrastructure, health, MSMEs and so on.

Separately, a similar assessment also came from the Senior Economist, Fasial Basri. He assessed that the use of subsidized fuel so far has been dominated by private cars, which are affluent people.

Faisal also added that 98.7% of users of subsidized fuel in the 4-wheeled vehicle category are private cars. “What about the poor who own a private car?,” he said during a discussion in Jakarta.

He also considered that the provision of subsidies is more appropriate if it is given directly to the people who are entitled to receive it. “It is better to give it to the person than to the commodity,” he said

Regarding the mechanism, Faisal also views that Direct Cash Assistance (BLT) is an effort to divert subsidies so that they are right on target for the people who are entitled. “Cash. Straight to the person. 100 percent enjoyed by the participants, “he said.

He also supports that compensation assistance be given to the public transportation sector, as a step to reduce the public’s burden on fuel price adjustments.

“God willing, this is much better huh. Raising the consumption of the lower class,” concluded Faisal Basri.

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