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Indonesia: Rupiah Weakens, Govt Assures No Increase in Fuel Price
TEMPO.CO, Jakarta – The Minister for Energy and Mineral Resources (ESDM) Ignasius Jonan assured the price of Premium and Solar-branded fuel would remain unchanged in the near time.
“The government does not plan to increase the fuel price in the near time. That’s the answer,” said Ignasius when asked about the possible increase in fuel price during a discussion at ESDM Ministry building, Central Jakarta, Tuesday, September 4.
The issue on the fuel price hike emerged in line with the weakening of rupiah. Bank Indonesia’s middle rate yesterday recorded rupiah at Rp14,840 per US dollar, compared to mid-August last year at Rp14,621 per US dollar. The concern was arising considering the country’s dependence on the import of the commodity was still high.
Since June 2017, President Joko ‘Jokowi’ Widodo opted not to raise the fuel price and that based on the government’s certain calculations. The government had announced the regulation many times and assured it did not relate to 2019 Presidential Election.
By the regulation, the government added the subsidy of fuel in a bid to maintain the price. In the 2019 Draft State Budget, the government planned to add subsidies on Solar to Rp2,000 per liter from previously at Rp500 per liter.
On the other hand, Indonesia still relied on the crude oil import. Based on ESDM Ministry data, the import of crude oil or petroleum products reached US$ 1,74 billion and US$ 3,82 billion respectively per the second quarter of 2018.
The regulation sparked many criticisms as it was considered to weaken the rupiah. Today, the rupiah exchange rate against the US dollar is at the level of Rp14,900. An economist from the University of Indonesia Chatib Basri deemed the fuel subsidy only attracted those people using non-subsidized fuel to subsidized fuel which then increased the import.
Source: https://en.tempo.co/read/news/2018/09/05/056921368/Rupiah-Weakens-Govt-Assures-No-Increase-in-Fuel-Price