Indonesia : Jokowi’s Bold Move

INDONESIA - In Brief 19 Nov 2014 by Cyrillus Harinowo

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In less than a month in office, Indonesian new President made a bold move by raising the domestic fuel price. The price of subsidized gasoline was increased from Rp. 6,500 per liter to Rp. 8,500. The price of subsidized diesel oil was also increased from Rp. 5,500 to Rp. 7,500 per liter. With that move he incurred a risk of having a higher level of inflation and the resistance from the people. However, the benefit by increasing the fuel price is also not small. In a way President Jokowi unlocked the immense potential for having a much larger fiscal space to finance the infrastructure development as well as the social programs which he pledged during the previous campaign. Prior to announcing the oil price increase, Jokowi launched the iconic social programs, the Indonesian Health Card, Indonesian Smart Card and Indonesian Welfare Card. The three social programs were very successful when introduced in Solo, the City in the Central Java Province that was under his leadership as a Mayor. Such a program is currently also underway in Jakarta, the city where he became the Governor until last month. Therefore, having that experience in the two places, he has strong confidence that they can be equally successful to be implemented nationwide. The financing of the infrastructure development can also be done more speedily with the availability of the fiscal space. In the news today, the Minister of Finance stated that the irrigation development will be sped up with the new fiscal space. Similarly with the development of toll roads, ordinary roads, ports and other maritime infrastructures and countless others. Therefore, in the economic field, such a policy has multiple benefits t...