Today’s the climax ladies & gentlemen. As Indonesia’s House of Representatives (DPR) is holding a meeting to vote on a proposed bill to cut down on fuel subsidies, thousands of protesters are rallying outside the Parliament Building to oppose the move that would result in fuel price increase. Since Suharto became Indonesia’s President in 1967, the government has heavily subsidized certain fuels, particularly kerosene and gasoline, to help protect the purchasing power of the populace in the then-nascent Republic. The proposed subsidy cut will increase the price of gasoline from Rp4,500/liter (US$0.49) to Rp6,000/liter (US$0.65)
Since the bill was first proposed in February, protests have been held in several major cities across the country, with a few having erupted into violence. With that in mind, the government have deployed 14,000 police officers and 8,000 soldiers from the national army (TNI-AD) today to secure key locations in Jakarta, including the Parliament Building, the Presidential Palace and Soekarno-Hatta International Airport.
Indonesia spends US$18.5 Billion last year on fuel subsidies. This constitutes some 15% of the national budget for FY2011 and is higher than government spending on healthcare and education for that year, combined. That is also more than what was allocated for infrastructure development in 2011. Definitely more than the spending allocated for poverty alleviation, and it is far higher than what we spend on the military and police combined.
There is something wrong with government subsidies of fuel, an intervention in what should effectively be a free market. There is something definitely wrong with a government that spends more on subsidizing fuel than it does on the welfare of its people. This is, categorically and without a doubt, the biggest wasteful spending in our government budget. Read more of this post