The Indonesian government does not need to raise domestic fuel prices as the country has sufficient oil resources, said former state minister for national development planning Kwik Kian Gie.
Antara news agency quoted him as saying: “The government will not need to spend a single cent even if the global oil price soars to US$100 a barrel. This is because Indonesia has oil,” he said after the launch of a book titled “The Indonesian Macro Economy: The Latest Developments and Prospects in 2005” at the Indonesian Institute of Business School of Economics (STIE-IBII) in Jakarta.
He said that it was not true that the state budget would “go bust” if the government increased its fuel oil subsidy and did not raise fuel oil prices in response to the current surge in global oil prices.
While admitting that the country’s oil output was not enough to meet its domestic needs, he said the crude imports could be covered by the surplus 1,460 rupiah the government earns per litre on fuel oil sales. (US$1=9,300 rupiah).
“Hence, an increase in fuel oil prices will be unnecessary if is only a matter relating to the state budget,” he said.
However, he added that it was a different issue if the government wanted to raise raise the fuel oil prices because they were lower than those in other countries.
Indonesia’s gasoline price Ð at 2,000 rupiah a litre Ð is well below the average global price of 3,200 rupiah a litre.