A HIDDEN AGENDA?: The Questions of Domestic Oil Price Increase.
By: Neneng Tarigan.
By: Neneng Tarigan.
The Indonesian government planned early
of 2012 to increase the price of premium oil, has received various
reactions from number of political parties, students/activists and quite
a number of people from all over Indonesia.
As usual, there is always pros and cons
to every government policy. As an independent writer (note: I dare not
call myself as an analyst) my opinion towards this policy is clear that I
was not in favor of the policy, though the price of oil in
international market that time was sky rocketing due to the political
situation in oil-producing country in Africa such as in Nigeria and
most particularly in countries in the Middle East such as Libya, Iraq
and Iran as the largest oil-producing countries in the world!
The rapid increase of international oil
price is always inseparable with the interest of the developed
countries like the United States of America and its allies towards the
continues supply of oil. For the reason of getting and controlling a
continued supply of oil, they sometimes put pressure among others by
imposing the policy implementation on the “fight against terrorism”,
“the ban on Weapon of Mass Destruction” and to “help develop of
democracy” in various oil producing countries. The impact of the
pressure is sometimes contra productive and just further create the
insecurity in those target countries, and most likely would further
increase the international oil price. The ones that suffered by the
increase of international oil price, of course the developing nations
especially the non oil producing ones!
Being an oil-producing country, and a
country with Muslim majority that strategically located between two
continents (Asia and Australia) and two oceans (Indian Ocean and the
Pacific), have brought Indonesia under the microscope of the developed
nations!
Actually Indonesia, might play an
important role in the international forum by using its geopolitical
advantages as a country with the largest Muslim population in the world
and located between the two continents; but the capacity is not yet
there. Indonesia has almost no power to influence the policy of
international oil price, even from the international political side.
Therefore, the increase of
international oil price would greatly affect the Indonesian government
budget, because, although Indonesia is an oil producing country,
Indonesia is also a net importer of refined oil. Beside of it, the
subsidy to the price of oil and gas for the poor as tasked by the
Indonesian Constitution 1945, is a big burden to the government budget!
Most unfortunately, if the price of oil
in domestic market is too low, that would reduce the capability of the
government to finance the development programs, and besides, that would
also enlarge the opportunity for smuggling, especially if the price of
oil in international market is higher.
In my point of view, there are many
ways that the Indonesian government can take to revive the government
budget despite of increasing the price of premium oil. Most probable
policies among others are by: (1) reducing government spending, (2)
postponing some unnecessary spending for example for the facilities of
the members of the parliament and the government officials across the
country, (3) introducing the use of non oil energy for vehicles and
electricity, improve the use of energy conversion from oil and natural
gas into the use of more environment friendly energy such as bio energy,
hydro energy or solar energy, (4) increase the efficiency of all state
owned companies most particularly those companies that involved in oil,
gas and electricity business, and (5) increase law enforcement to fight
the corruption, etc.
Nevertheless, everyone knows that the
easiest way to revive the government budget, of course mainly by
implementing the policy in increasing the price of oil; with hopes that
it would also easily help recover the popularity of the ruling party
(the Democratic Party/Partai Demokrat) which is now under the test
because of the corruption cases that involved many of its members.
The majority of the ruling party
members and its coalition parties’ members hoped that by increasing the
price of domestic oils, that would allow a massive implementation of
direct financial assistance up to the amount of IDR 25 trillion for 18
million Indonesian house holds who lives under poverty level. By
increasing the price of oil it hopes that would help the poor a
financial assistance of IDR 150,000.- per household per month or equal
to USD 18.- per month which is equal to 25 litter of premium oil/month,
until 9 months long. As the result of this planned policy, it hopes
that the ruling party may get back a full support from the people or at
least from their former constituents.
The problem actually, every time when
the discussion on the policy of increasing the price of oil and reducing
the subsidy of oil appeared, that would trigger the increase of food
prices and even become worse if the policy is taken because that would
surely contributing to a multiplier effect to the price of electricity
and transportation!
Subsidy is the most powerful issue and
way in developing country like Indonesia to unstable the position of the
government in power.
For the opposition, the subsidy issue
is the most effective time to organize a massive demonstration to stop
the government from taking the unpopular policy which I also believed
will affect the cost of living of ordinary citizens in general!
The demonstrations against the increase
of the price of oil, is always unstoppable and the tension between the
government and the demonstrators might almost uncontrollable.
As always, students that stand in the
very front line of the demonstrators have only one purpose; to protect
the people interest with all consequences even with their own lives! A
good reminder was the accident of 1998, where the most popular president
of Indonesia (Suharto) with full backed-up of the arm forces and the
parliament were unable to stop the demonstrators and was crippled by the
people’s power!
I wish, history will not repeated and
there will be mutual understanding between the policy makers and the
people regarding the oil price policy.
People are tired living in poverty, but
that does not allowed any policy makers to make use of people economic
condition by pretending of helping them temporarily only to gain benefit
to win the 2014 general election!
BSD City, 27 March 2012. By: Neneng Tarigan.
