May 28 2008
Fueling Trust
So no more petrol top-ups in Johor Baru for Singaporean motorists. The Malaysian government finally decided enough is enough. With oil prices worldwide soaring, Abdullah Badawis administration could no longer allow foreigners to enjoy subsidized fuel, meant primarily for Malaysians. Yes, I admit, Im one of the hundreds of thousands of Singaporeans who has enjoyed the Malaysian governments generosity.
All this while I never thought I had deprived Malaysians of their share of subsidies whenever I topped up my fuel tank. To me, I was responding to market why pay more when you can pay less?
I continued enjoying subsidized fuel in Indonesia even more because Jakartas fuel price is one of the lowest in Asia. A litre of subsidized petrol costs only about SGD0.80 cents.
But bit by bit, reality began to bite. I no longer could look into the eyes of the Jakarta street beggars at traffic junctions as I counted my loose change. I felt Ive deprived them of better lives; the street kids of proper education and the sick of better medical. I stopped buying subsidized fuel.
The Indonesian government has successfully convinced me that they are serious and sincere about channeling the fuel subsidies from the better-off vehicle owners to the 19 million poor households. I bought the argument put forward by my favorite Indonesian minister Sri Mulyani (Finance) for the fuel hike. Maybe this is because I’m biased, I personally like her. Maybe also because Im a Singaporean who has learnt to trust the government of the day.
But the Yudhoyono administration is having a tough time convincing its own citizens. Not that Indonesians do not understand the mathematics behind the fuel price increase. Its just that they are still learning to trust the government. You cant totally blame them. The scars of corruption, cronyism and nepotism - KKN in Indonesia - left by the Orde Baru regime have not healed. In fact KKN is still alive in this new democracy. So Indonesians have every reason to be skeptical about this whole exercise of reallocating fuel subsidies to the poor. Time and a more transparent government may one day win them over.
It’s a short-term pain, but a long-term gain, in terms of better economic stability and reducing imbalances. The moves follow similar price increases almost everywhere and its a recognition by governments that they can no longer shelter their populations from the global spike in energy prices.
The recent fuel price hike had caused to be furious. It will certainly have a big impact on the all sectors and the whole economy as a whole. In just about a week after the increase, we could see how it clearly affected our expenditure, especially the lower income groups. Many things have also increased since, such as transportation fares, food prices, electricity tariffs, just to name a few. As a result, inflation rates will continue to grow exponentially.
However, the worst has yet to come. It is inevitable that the price of fuel will keep on increasing. Let’s face facts - no matter how much we complain, lament or protest against it, the price of fuel will never go down. Instead, we should be looking into solutions and other alternatives to cope with this situation.
~ natasha
Hmm… I quite disagreed with your 5th & last paragraphs, Subsidized may not be necessarry good/sincere/generous/right decision. It may actually cause “moral-hazard” problem (for eg: the subprime/credit crisis in US that triggered the inflation in Asia lately, citizens might become lazier because they are too dependent with government’s help and etc).
Besides, fuel and energy is the only resources why Indonesia could survive up to today. But, not to forget that oil & energy are scarcity/limited resources. If the government keep subsidising/by producing it recklessly, if and only if.. one day the they run out of resources, soon or later riots/chaos will happens.
Therefore, I believe the people in Indonesia still don’t understand how does the mathematic of the price of oil work yet, plus they don’t trust the government either (since their government’s not transparent enough, I totally agreed with you).
I really like this post, especially your 4th paragraph. Such a righteous decision for buying unsubsidized fuel. I guess I should call you an eco-economist friendly, yet we all still could do much better by taking public transport/bicycle though.
~Hadiman
Nice website!!