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Indonesian Economic Condition Ready to Face the Impact of Fuel Price Adjustment

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By: Deka Prawira)*

Indonesia’s economic condition is believed to be able to deal with the impact of fuel price adjustments. The people’s purchasing power continues to increase and is supported by the fuel compensation fund.

Fuel prices have been adjusted as of September 3, 2022. Where Pertalite costs 10,000 rupiah per liter, Pertamax is 14,500, and Diesel is 6,800 per liter. Price adjustments occur throughout Indonesia and the announcement has been around for a long time.

Economist Fithra Faisal stated that various indicators show that the Indonesian economy is quite solid in facing the adjustment of subsidized fuel prices. The government should take advantage of this momentum to reduce the burden of fuel subsidies that burden the fiscal burden of the state budget.

In a sense, the economy in Indonesia is positive and in the 2nd quarter of 2022, its economic growth is 5.44%. This growth is very good because even though it is still a pandemic period, there is an increase in the economic sector. This shows that the financial condition of the Indonesian people is starting to improve and is not too affected by the negative effects of the pandemic.

The fuel price adjustment does not have much effect on the pockets of many people because their economic condition is already healthy, even more so than before the pandemic. Therefore, when the government decides to change the price of fuel, it will not make people dizzy, because they can still afford it. Even non-subsidized fuel can also be purchased because there is still a lot of money.

Fithra Faisal added that Indonesia’s economic condition is improving and the indicator is national deflation. This means that there will be no more inflation, and the largest deflation will occur after 2019. In a sense, when inflation has disappeared, the country’s economy will be healthy and the adjustment of fuel prices will not have much effect on the community.

When the economy is positive then there is no inflation then society is fine. They do not protest because the price of subsidized fuel has been adjusted. The reason is because the price of Pertalite is still considered reasonable, only 10,000 rupiah, and is still affordable by the pocket. There’s no surprise that the prices have changed, and they’ve only changed a little.

The price of Pertalite is also considered affordable because people understand that the economic price is 13,500 rupiah, while currently selling it for 10,000 rupiah. The community is aware that there are still subsidies provided by the government and the adjustments are not too drastic. This is done so that there is no surprise among the little people.

Indonesia’s economic condition has also improved and this is evidenced by the bustling markets and malls again, after there were no visitor restrictions. People’s purchasing power has improved again and shows that there are still many people who have deep pockets. Therefore, the fuel price adjustment does not have much effect on them, because the price of Pertalite is still considered very cheap.

Many people realize that the price of fuel in Indonesia is cheap when compared to other countries. For example, in the United States, the price is almost 15,000 per liter, while in Singapore it is 33,000 rupiah per liter. The price of fuel in Indonesia is small and when adjusted, it is not as high as the price of gasoline abroad, which is already insane.

The adjustment of fuel prices in many countries occurred due to the political crisis in Eastern Europe, when oil refineries there had difficulty distributing crude oil. As a result, according to economic law, the price also changes to 100 dollars per barrel. The public realized that the fuel price adjustment occurred because the price of crude oil also changed, not because it was purely the government’s desire.

Initially, it became a dilemma when there was an adjustment in the price of fuel and the subsidy had to be reduced, but if it is not done, it will burden the state budget because it has to bear a subsidy of 502 trillion rupiah. Instead of the state’s financial situation collapsing, the only option is to reduce fuel subsidies. 

The public is aware of this and does not want Indonesia’s already improving economy to worsen due to having to pay for fuel subsidies. Don’t let Indonesia increase its debt and go bankrupt because of it. Indonesia’s economy has risen and must be stabilized, and the adjustment of fuel prices will not have a major impact on the financial condition of the people.

So far, people are also used to using non-subsidized fuel such as Pertamax because it makes the performance of motor vehicles better and cleaner on the engine. When the price of Pertamax is also adjusted, it doesn’t matter, because the quality is good and the price is also good. People are still willing to queue to get Pertamax at gas stations.

Indonesia’s economy is well prepared to face the impact of fuel price adjustments. Inflation has passed and there is a surplus in the country’s economy. Therefore, now it is very appropriate to adjust the price of fuel. The public already understands that this situation also occurs globally, because the price of crude oil also changes.

)* The author is a contributor to Pertiwi Institute 

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