The Damaging Subsidies

With the ever rising oil prices, the Indonesian government has been thriving to 'ease' the suffering on millions by subsidizing oil. A pretty noble act, really, but somehow dumbing and futile. According to the Indonesia Association Petroleum (IPA), total subsidy for oil and electricity (from fuel) has reached the toll number of 239,4 T Rupiah.

Imagine the burden it has on the APBN. That much must be channeled only to prolong the lives of millions.

ICP announced that with evry $1 increase in the price of oil (assuming $1 = 9,000-9100 Rupiah) will ultimately lead to a rise in 3,15 T Rupiah. With the current instability and uncertainty, I doubt that oil subsidy will fall anytime soon.

Subsidy now has become on of the largest spender in the govt's budget that it's ridiculous. That much Ts can be spent to help other real and productive sectors such as education and training so that Indonesians can actually educated themselves to get better jobs and better income. It would also increase the country's productivity and living standards in the future.

I know that this seems like a far, if not impossible goal to achieve. But I personally think that it's way better than feeding the people with the money that we honestly cant afford.

With the current education system and health implications (esp. malnutrition), some actually believe that by 2010, Indonesia will suffer from a lost generation because they're too dumb and malnutriced to begin with.

I think subsidies should still be given, only less with closer monitoring. Subsidies to the people is always way better than putting the money into the rats' pockets. I just think that the government should pay more attention on the micro of this economy than boasting on how we can still hold against the effects of the US's credit crunch.