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Showing posts from March, 2012

stupid subsidies and the poor make the Indonesia government confuse

IT HAS become something of a ritual in Indonesia: the panicky stockpiling of cheap petrol ahead of a mooted price rise. Fuel prices here are not dictated by the vagaries of the world price - they are dictated by the government, which subsidises them heavily to keep them affordable. But the cost to the national budget of subsidies on both oil and coal is huge. About 15 per cent of the government's entire budget - or $US20 billion ($A18.5 billion) - is spent just to maintain low prices. It's more than the combined health and education budgets, says Australian National University economist Hal Hill, and when the world oil price increases, the cost to the national budget also jumps. So, last week, Energy and Mineral Resources Minister Jero Wacik announced a plan to increase prices in April by up to 33 per cent. Yesterday, as a crowd protested outside, he met legislators of the House of Representatives, whom he must convince to vote for it. In Jakarta, one of the most polluted an