Incidence of Diesel, Gasoline, and Kerosene Subsidies, Indonesia

FIGURE 10.1 Incidence of Diesel, Gasoline, and Kerosene Subsidies, Indonesia, 2004 

Indonesia has traditionally had little in the way of targeted safety nets. For many years, Indonesia had universal price subsidies on fuel, with price levels fixed well below world prices. By 2005, with the rise in world fuel prices, the cost of the subsidy was equivalent to 5 percent of GDP. Between 1998 and 2005, fuel subsidies averaged three-quarters of the social protection system s total subsidies and transfers. As common with such subsidies, they were highly regressive (figure 10.1). 

FIGURE 10.2 Coverage and Incidence of the Unconditional Cash Transfer Program, Indonesia, 2005 

The compensation was intended to last just one year, and did last just that long. However, the experience led to interest in adding an element to Indonesia s antipoverty policy, which has had little in the way of safety nets and no poverty-targeted cash transfers. In 2007, the authorities began piloting a CCT program that would build and improve on the former cash transfer program. 

FOR PROTECTION AND PROMOTION THE DESIGN AND IMPLEMENTATION OF EFFECTIVE SAFETY NETS 

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