Key Points
- Subsidized Fuel prices were raised by 30% to battle swelling energy subsidies.
- The Indonesian government offers concessions to underprivileged households.
- Small businesses show concern about their profits and growth.
The Indonesian government faces high ballooning subsidy costs. In an attempt to cut back on the extra costs for subsidies, the government decided to increase the fuel prices by 30%. Hence, the government will manage to rein in the ballooning energy subsidies before it shoots sky-high by the end of the year. However, the increase in subsidized fuel prices may affect the small businesses of Indonesia.
As a result of the fuel price hike, small businesses, including car rentals and delivery services show concern. Additionally, small businesses are compelled to increase product and service charges to maintain proper profit margins. Consequently, this can not only create unease among the customers of small businesses but also drive them away in search of better deals.
The cost of subsidized gasoline rose from 7,650 rupiahs per liter to 10,000 rupiahs per liter. The cost of diesel skyrocketed from 5,150 rupiahs per liter to 6,800 rupiahs per liter. Though the condition seems harsh, the maneuver will help the Indonesian economy to heal itself.
The increase in the price of subsidized fuel can help the Indonesian government to curb the expenditure on energy subsidies. Moreover, the Indonesian government has decided to extend support to underprivileged families to cushion the blow of the fuel price hike.
“We will distribute 150,000 rupiahs per month starting from September for four months to 20.65 million underprivileged families,” stated President Joko Widodo.
Many countries across the globe face the need to make rather radical decisions to prevent collapses in their economy. Citizens of all nations will likely face further changes in sources of income, expenditure, and profit margins in the coming months.
Reference,
https://www.channelnewsasia.com/asia/indonesia-subsidised-fuel-price-increase-micro-businesses-2929006
