Indonesia: Running on fuel or fumes?

During the national controversy about the proposed government planned fuel-price hike, one argument for removing the subsidy was to provide incentives for alternative and renewable energy sources.

After all, these abound in equatorial Indonesia — wind, water/rain, tides, geothermal and, of course, solar energy! Any of these is better than our current addiction to polluting, non-renewable carbon fuels.

But then I identified another source: Fume energy! Let’s face it, people are fuming all over the country about the fuel-price hike — from angry and emotional demonstrations across the country to heated “debates” in the House of Representatives.

If only Indonesian scientists could develop a technology to harness “fume power”, we could turn anger and argument into sources of renewable energy! After all, there’s “pee power”, where urine is transformed into hydrogen and then electricity. If we can produce “electrifying excretions”, why not “fume fuel”?

The source of all this fuming is, of course, the popular fear that if the government chops the subsidy, the (poor) people will suffer. The government, however, fears that if it doesn’t chop it, the state budget will suffer.

Believe it or not, dear readers, just for once I think the government is right! A fact sheet issued by the Energy and Mineral Resources Ministry titled “10 Answers about the Price Rise of Subsidized Fuel” ( gives a very clear, concise and convincing explanation of why fuel prices need to rise.

In it, the government says that the cost to produce and distribute low-octane Premium fuel is Rp 8,000 per liter, so even if the price is raised to Rp 6,000 (from the current Rp 4,500), there’s still a subsidy of Rp 2,000. If the price was raised to Rp 6,000, the funds released can be used to develop infrastructure, schools and health facilities badly needed by the poor.

But the problem with the ministry’s explanation is that it only came out in March. Talk about too little, too late! They should have been ramming their argument down people’s throats any way they could months ago! Their failure to do so is one cause of not only the nationwide demonstrations, but also fuel hoarding, and price increases on basic commodities.

It’s all pretty bizarre really. The richest 10 percent of households consume 40 percent of subsidized fuel. If the fuel-price hike had been implemented, the government would have given direct cash payments (BLSM) to the poor for a period of time, to help cushion the blow. So, although protesting, the poor don’t realize it, what they are really saying is: “I want people with the cars and the motorbikes to get the money that could be in my pocket”. Ironic, isn’t it?

What happens if the price of oil goes completely through the roof? The worst case would be that the government goes broke trying to pay the increased subsidy, and the economy collapses. Or, just as bad, it walks away from the subsidy without warning, and fuel prices become astronomically high. Now, that would really hurt the middle class, and then you’d have a much more serious crisis on your hands.

By buckling under pressure now, the government is just deferring the crisis, leaving a time-bomb ticking in the budget and the economy. As David Bowie says in his song “Cat People”, it’s like “putting out fire with

The fundamental confusion about all this stems in part from the nationalist-socialist politics of Indonesia’s early years, still enshrined in Article 33 of the Constitution. This says that the state has to control natural resources and manage the economy like a family, for the benefit of the people. Article 33 has been a source of legitimacy for the long-running “people’s economy” argument, always beloved of our populists and demagogues.

Now, political parties and the people alike are using it to oppose the subsidies, despite the fact that they are fundamentally at odds with Indonesia’s efforts to achieve a modern, open-market economy. Unfortunately, this conflict is now a deep one in Indonesian political culture. It’s hard to fix, and it is regularly exploited by politicians. It has great resonance because Indonesia has a lot of impoverished people, so it’s always an easy weapon to use against any government.

The other great irony in all this is that as a second-term President, Susilo Bambang Yudhoyono had the chance of a political lifetime to implement a fundamentally important policy. What’s he got to lose? It’s not like he’s keeping the seat warm for a successor because there isn’t one, and his Democratic Party won’t win the next election.

Unfortunately, another thing we have inherited from the past is the Soeharto-era hysteria about “succession”. There’s still two years to go to the elections but suksesi anxiety is already playing out in the fuel-subsidy debate, as politicians use it to maneuver for attention and play political games.

In fact, the way that the fuel-subsidy issue is dealt with reflects a wider and growing displacement of policy by politics — by both the President and the House. People are crying out for decent, competent government and sometimes, in order to do that, an elected leader should grit his or her teeth, ignore the vox populi and do the right thing — even it means facing down opposition.

It matters, because if things continue like they are, we won’t just be fuming, we’ll be going up in smoke.

Julia Suryakusuma. The writer ( is the author of Julia’s Jihad.