Los Cabos, Mexico. President Susilo Bambang Yudhoyono said on Sunday he would continue Indonesia’s subsidy policy as long as it was needed.
Yudhoyono said on board the plane that took him to the G-20 summit in Mexico that the subsidy and investment climate in Indonesia had always been a point of focus for G-20 member countries.
“Frankly speaking, Indonesia has often been pressured with regards to its subsidy policy,” he said. “I am responsible and I will tell our friends in G-20 that the subsidies help the very poor and we must give them.”
Yudhoyono said remarkable economic growth made by a country would be useless if there were still poor people living there.
“Certainly subsidies that do not meet targets must be reduced because they cut into our budget to build infrastructure, improve education and health and other sectors,” he said.
Regarding Indonesia’s investment climate Yudhoyono said, “frankly speaking, we still have to improve it.”
He said infrastructure development was one of the government’s priorities.
Yudhoyono announced five new policies last month aimed at reducing government expenditures on subsidized fuel, including banning its sale for government vehicles.
Government-owned vehicles use around 1.3 million liters of fuel per day, or 500 million liters a year, according to one estimate. That is just a small fraction of the 40 billion liter quota for subsidized fuel in the 2012 state budget.
The ban, however, does carry symbolic weight for Yudhoyono following his administration’s failed attempt to increase subsidized fuel prices starting on April 1.
Indonesia is targeting to save Rp 5 trillion ($535 million) in its subsidy budget as of December 2012, with the implementation of the five new policies.
The government has allotted Rp 137.3 trillion for fuel subsidies and Rp 64.9 trillion for electricity subsidies in the revised 2012 state budget.