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  • Fuel price rise

    I read in the article below "[COLOR=#333333][FONT=Helvetica]The government has said that it will increase the subsidized fuel price by the end of this year and distribute various cash transfer schemes to limit the policy’s impact on the country’s poor"
    [/FONT][/COLOR]
    [COLOR=#333333][FONT=Helvetica]
    Does anyone know what this means how will they do this?
    [/FONT][/COLOR]
    Obviously long term its something that has to happen get rid of subsidies, ideally very gradually, but it is a bit of a worry the effect it will have on the very low income(poor)

    I do worry for my friends in the outer islands of sumatra, thew fuel price there is already Rp 8,000+ even up to Rp15,000 when fuel supply is low, and they really rely on fuel to fish to get money or feed there family etc.

    http://thejakartaglobe.beritasatu.co...fuel-year-end/

  • #2
    Last increasing of fuel price, the gov gave BTL (Bantuan Tunai Langsung) or fresh money for the poor, but it's only IDR 150K a month, if im not mistaken. But idk, how much the new BTL is. I wish the new gov will provide more job vacancies for the poor in small cities, so they will get more money rather than BTL.

    Comment


    • #3
      If the poor fisherman can't afford the fuel, perhaps a more effecient way of fishing, or a different line of work entirely is necessary. So many industries have disappeared, often because they just weren't effecient.

      The fuel subsidy is such a hole in the budget, and the money would be better spent on healthcare and infrastructure.
      Sasa Bule is having a bayi!

      Comment


      • #4
        Remember that the definition of poor varies from country to country , organization to organization , and maybe , from time to time too .

        To Indonesia , being poor is having a very low income (see articles below) , so your friends there may not be defined as poor by the government .


        ----------------------------------


        (from http://www.thejakartaglobe.com/home/...poverty/474346

        Indonesia 'Should Be Ashamed of Failure to Reduce Poverty'
        Aguis Triyono | October 27, 2011

        "... The Central Statistics Agency (BPS), he said, put the number of Indonesia’s poor at just 30.2 million, which is much lower than the ADB’s 43.12 million.While the ADB marks the country’s poverty line at an earning level of $1.25 per day, the government has set it at $1.13. Setyo said that if Indonesia does as many other countries and set its poverty line at $2 per day, the statistic for the number of poor here would further increase to reach at least 117 million, or about half the population..."

        -----------------------------------


        http://www.thejakartaglobe.com/busin...nk-says/509325

        Indonesia Should Spend More on Social Aid, World Bank Says
        Tito Summa Siahaan | April 04, 2012

        " ... According to the World Bank, around 12.5 percent of Indonesia’s 240 million people are living below the poverty line, which the government defines as a monthly income of Rp 233,000. Some 38 percent are borderline poor..."

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        • #5
          Last time the issue was surfaced remember there were big demo's around March 2012, wasn't it (my school closed for a couple of days due to safety concerns because of the demos). They voted to put it off for several months and re-work the numbers to let things calm down, then if I recall correctly it was in November or so of that year the price was increased (subsidy was lowered), but not as much as originally planned. This is obviously a very sensitive political issue, for understandable reasons.

          My wife thinks we should change some money to US currency now, before the rupiah falls further as expected after "BBM naik". I'm thinking (optimistically, and perhaps naively) it would be better to wait and hope the rupiah strenghtens again within the next several months.
          [FONT=Comic Sans MS]Warden: "What we got here ... is failure to communicate."

          The Dude: "Oh yeah? Well that's just, like, your opinion, man."[/FONT]

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          • #6
            The fuel price increase will just be a short term problem for the fishermen, as we will have another round of inflation right afterwards that will let them raise the price of their fish. They will just pass the cost on to the customer (unless, as Jaime said, there is a more efficient way of doing the job).
            This is what seems to usually happen: 1. Fuel price increase raises the production cost of my supplier by 10%. 2. He raises his price to me by 15%. 3. I raise the price to my customer by 20%. 4.The customer complains about the price going up, then pays it when he realizes all of my competition did the same thing.

            You might notice that I made a profit on this. The only people in in this scenario who are losing are the manual labor worker and the end customer. The poor will get even poorer as the prices rise long before their salaries catch up...(maybe not, if it's timed right) Government will give a huge salary increase to cover inflation from last year. Salary increases will lead to a repeat of the things listed above (1-4). Fuel prices will be out of whack with the international prices (end result of local inflation). Government will raise fuel prices. And around and around we go, business owners winning and employees losing every time.

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            • #7
              Originally posted by Happyman View Post
              The fuel price increase will just be a short term problem for the fishermen, as we will have another round of inflation right afterwards that will let them raise the price of their fish. They will just pass the cost on to the customer (unless, as Jaime said, there is a more efficient way of doing the job).
              This is what seems to usually happen: 1. Fuel price increase raises the production cost of my supplier by 10%. 2. He raises his price to me by 15%. 3. I raise the price to my customer by 20%. 4.The customer complains about the price going up, then pays it when he realizes all of my competition did the same thing.

              You might notice that I made a profit on this. The only people in in this scenario who are losing are the manual labor worker and the end customer. The poor will get even poorer as the prices rise long before their salaries catch up...(maybe not, if it's timed right) Government will give a huge salary increase to cover inflation from last year. Salary increases will lead to a repeat of the things listed above (1-4). Fuel prices will be out of whack with the international prices (end result of local inflation). Government will raise fuel prices. And around and around we go, business owners winning and employees losing every time.
              It's often been said that the subsidized fuel benefits middle and upper income Indonesians the most. I doubt a 50% increase will stop all the Fortuner, Kijang, CRV and Grand Livina owners from gassing up. Perhaps it will cut into the gas smugglers profits.

              I see gas prices now at about $2 a gallon. If it increases to 9500 a liter, it would make it about $3. Gas in many places in the US is currently selling for this amount. This includes pretty hefty US federal and state taxes of about 1/6th the price (50 cents per gallon).

              When I read about what the unsubsidized price, it seems it would be over $4 a gallon, which seems over 40% higher than the US when you strip taxes out. Is Indonesian gas highly taxed, or is there something else I'm missing?
              Sasa Bule is having a bayi!

              Comment


              • #8
                They need to change the discourse. It's a fuel subsidy decrease.

                Comment


                • #9
                  Originally posted by Jaime C View Post
                  It's often been said that the subsidized fuel benefits middle and upper income Indonesians the most. I doubt a 50% increase will stop all the Fortuner, Kijang, CRV and Grand Livina owners from gassing up. Perhaps it will cut into the gas smugglers profits.

                  I see gas prices now at about $2 a gallon. If it increases to 9500 a liter, it would make it about $3. Gas in many places in the US is currently selling for this amount. This includes pretty hefty US federal and state taxes of about 1/6th the price (50 cents per gallon).

                  When I read about what the unsubsidized price, it seems it would be over $4 a gallon, which seems over 40% higher than the US when you strip taxes out. Is Indonesian gas highly taxed, or is there something else I'm missing?
                  Are you sure? Subsidised fuel: 6500 x 3.8/12 000? Are you using 12000 rupes to US and 3.8 litres per US gallon? I dont have a calculator with me.

                  Comment


                  • #10
                    Originally posted by johntap View Post
                    Are you sure? Subsidised fuel: 6500 x 3.8/12 000? Are you using 12000 rupes to US and 3.8 litres per US gallon? I dont have a calculator with me.
                    I'm basing it on the current price of 6500, the projected price increase of 9500, and the non subsidy price of approx 12k. I know how many liters are in a gallon.

                    You realize if you're using a web browser, you can google the answer to math problems, eh?
                    Sasa Bule is having a bayi!

                    Comment


                    • #11
                      Originally posted by Jaime C View Post
                      I'm basing it on the current price of 6500, the projected price increase of 9500, and the non subsidy price of approx 12k. I know how many liters are in a gallon.

                      You realize if you're using a web browser, you can google the answer to math problems, eh?
                      No I did not know that.

                      I misread you. But couldn't we compare current Shell price 10500 rupiah(?) to current US 3 dollars a gallon? (I don't have a car or a calculator). It seems that Shell is doing well if what you say about US state and fed taxes apply.

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                      • #12
                        Speaking of Shell, the price of BBM is a shell game. The government creates a budget annually based on MiGas exports and domestic costs, then *sometimes* adjusts as the global price changes in comparison to long-term contracts. Also, thru meddling by my native country, Indonesia was "advised" shortly after independence that crude oil should be refined into gasoline in Singapore for "security reasons" (whose security...?).

                        The real problems IMO are:
                        1. Indonesia is a major producer of oil but lacks independence/power because it produces very little consumables like gasoline.
                        2. Hoarding occurs due to stupidity and/or incompetence among policy makers. They procrastinate price increases until pressure becomes inevitable. Knowing that there is a fairly clear differential between local and global prices, it seems like a simple matter to institute something like 5% rise per month for a year (or whatever), easily implemented via electronic displays at nearly all gas stands. One Indonesian businessman told me the recent prez never considered this because he was a "mystic" who kept waiting for a divination to indicate appropriate timing.

                        Comment


                        • #13
                          Originally posted by johntap View Post
                          No I did not know that.

                          I misread you. But couldn't we compare current Shell price 10500 rupiah(?) to current US 3 dollars a gallon? (I don't have a car or a calculator). It seems that Shell is doing well if what you say about US state and fed taxes apply.
                          I saw a price at a Shell or similar station in the 12000 range this week. I didn't pay attention to what grade of fuel it was.

                          According to this Bloomberg article last month, unsubsidized Pertamina fuel is 11,800 per liter.

                          If we figure at 12k a liter, it comes in at $3.77 a gallon. This is 50% higher than non-taxed US prices. Is the Indonesian market that inefficient, corrupt, or are there some sort of tax on the price? The US price still includes profit for the gas stations.
                          Sasa Bule is having a bayi!

                          Comment


                          • #14
                            You would not get much better than this link for factors related to fuel prices (in Australia admittedly)
                            http://www.aip.com.au/pricing/facts/...uel_Market.htm

                            At around 1.35 dollar a litre in Oz, and with AUD at 10 600, taking about 50% taxation out, we get around 10 000 a rupiah.

                            So again, from the back of my envelope, Shell is doing well. I would assume if Shell dll are taxed we would know about it.

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