INDONESIA: As Indonesia approaches its 2024 presidential election, political promises have started to emerge, with one particularly attention-grabbing commitment coming from Syaiful Huda, a prominent figure in the National Awakening Party (PKB).
Huda has stirred controversy by pledging to provide free fuel for motorcycles (BBM) if Muhaimin Iskandar, also known as Cak Imin, wins the 2024 election.
However, the proposal to make motorcycle fuel (BBM) free comes with significant risks, especially concerning the country’s state budget, known as the State Budget (APBN).
Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE), pointed out that Indonesia is a net importer of oil.
Simultaneously, domestic oil demand frequently rises, impacting the trade balance deficit.
If this situation is combined with the provision of free BBM, which Indonesia does not produce domestically, it would lead to an expansion of the national budget.
The government would bear the full cost of subsidizing BBM, placing substantial strain on the APBN.
Manilet stated, “This will result in a significant increase in government spending. It means that BBM will be given for free, and the government will fully subsidize it from the BBM price itself, making it quite challenging because the budget and deficit space in the APBN are relatively limited.”
If the government persists in providing free BBM, alternative financing sources would be necessary. Manilet explained that existing revenue streams from taxes and non-tax sources have been insufficient to cover the cost of BBM subsidies.
One potential alternative is to seek new loans, although this approach carries its own set of risks.
Manilet added, “Certainly, debt is not a sexy thing, especially from a political perspective. Increasing debt will undoubtedly draw attention from many parties, including oversight institutions scrutinizing the government’s performance.”
Tauhid Ahmad, Executive Director of the Institute for Development of Economics and Finance (Indef), expressed skepticism about the feasibility of free BBM. Ahmad emphasized that such a move would burden the government’s expenses, primarily for subsidies.
Furthermore, if BBM becomes free, targeting the subsidies effectively would become even more challenging, as the current BBM subsidy scheme is considered inadequate.
Another risk associated with providing free BBM is the potential for global oil prices to suddenly fluctuate.
An increase in world oil prices would further strain government financing, potentially leading to increased national debt.
Free lunch and milk for all students in schools among policy proposals unveiled by Prabowo
In the midst of these discussions, Prabowo Subianto, the presidential candidate and Chairman of the Gerindra Party, unveiled a series of policy proposals outlined in the “Program Best Results Fast 2024-2029.”
One of these policies focuses on providing free lunch and milk for all students in schools, pesantrens (Islamic boarding schools), toddlers, and nutritional assistance for pregnant women.
However, Prabowo acknowledges that some individuals have doubts about his proposed policies. He stated that he has prepared strategic steps to implement these policies, including communication and discussions with experts.
Prabowo challenged his audience, saying, “Some may ask, can it be done? My friends, we have done the math. The resources are there, as long as we are willing and committed to serving the people.”
In response to these political promises, Masinton Pasaribu, a politician from the Indonesian Democratic Party of Struggle (PDIP), urged political parties participating in the 2024 election not to engage in empty rhetoric.
He emphasized the need to avoid “lip service” politics in the upcoming presidential election and called for political leaders to act in accordance with their words.
Masinton further criticized the coalitions formed before the elections, suggesting that they often present themselves as solid and strong in the media but eventually fracture and change direction. He argued that dynamic politics involve cooperation among political parties within a coalition, not the other way around.
Claiming that PDIP is cautious in selecting its partners and not rushing to choose a vice-presidential candidate, Masinton concluded, “Politics should be a space for providing commitment to the people because it is observed by the people, thus giving certainty to the people.”
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