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description Policy analysis public Paramadina Public Policy Institute

Why and how the energy subsidy in Indonesia should be reduced

Muhamad Rosyid Jazuli
Published 24 February 2020

Abstract

Having surfaced many times, issues of energy subsidy reduction have been a problem for every administration and have resulted in diverse political and social outcomes. Stakeholders keep on debating about what should have been done and should be done. This brief explains the challenges faced by the current policies and later provides reform policy recommendations to tackle the challenges. It contends that with careful measures, such as being undertaken with good social safety nets, Indonesia’s reform policy package would arguably soften the adverse impacts of energy subsidy cuts on many Indonesians’ lives, especially those of the unfortunate. If well applied, the measures could protect them from the increasing energy prices and even potentially free them from poverty.

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