Indonesia’s Fuel Subsidies: Action plan for reform

The report analyzes Indonesia's fuel subsidy regime, highlighting the fiscal burden of spending IDR 164.7 trillion (US$ 18.1 billion) in 2011. It evaluates the government's 2012 plans to restrict 'Premium' gasoline use and deploy CNG and LGV alternatives, while recommending a transition toward market-based pricing and improved public communication to mitigate social unrest.

• In 2011, Indonesia spent IDR 164.7 trillion (US$ 18.1 billion) on fuel subsidies, with IDR 76.5 trillion (US$ 8.4 billion) specifically allocated to gasoline.
• The government's 2012 reform plan for 'Premium' gasoline included prohibiting its use by private four-wheel vehicles in Greater Jakarta and official vehicles in Java and Bali, alongside a target to convert 46,000 vehicles to CNG and 250,000 to LGV in the Java-Bali area by the end of 2012.
• Infrastructure for non-subsidized gasoline (Pertamax) is insufficient; in Java and Bali, 295 filling stations require new investments to supply it, and Pertamina only has two of six refineries capable of producing Pertamax.
• The government proposed redirecting subsidy savings into four areas: cash transfers (BLSM) for 18.5 million households (IDR 25.6 trillion), public transport subsidies (IDR 5 trillion), productive activities like infrastructure and food security (IDR 30 trillion), and education (IDR 6 trillion).
• Civil society organizations (CSOs) are largely opposed to reform due to a lack of clarity in government plans and concerns that the poor will be negatively impacted; 60 per cent of surveyed CSOs were against fuel subsidy reform.
• The deployment of CNG and LGV faces practical hurdles, including a lack of filling stations (only eight CNG and ten LGV stations in Jakarta), poor CNG quality causing engine damage, and high costs for conversion kits (IDR 10 million to IDR 13 million).
• The report argues that ad-hoc pricing is inefficient and recommends transitioning to an automated pricing mechanism linked to international prices to reduce political interference and eventually reach a liberalized market.
• A pilot project using Radio Frequency Identification (RFID) to monitor mini-bus fuel consumption in Jakarta showed poor results, as 42 per cent of drivers did not understand the system's purpose.

APA

Braithwaite, D., Prasetyaning, A. C., Indriyanto, D. R. L. A., Lang, K., Lontoh, L., Siahaan, N., Vis-Dunbar, D., Wattimena, B. A., Widhiantoro, U., & Wooders, P. (2012). Indonesia’s Fuel Subsidies: Action plan for reform. International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/ffs_actionplan_indonesia.pdf

Chicago

Braithwaite, David, Alexander Chandra Prasetyaning, Diah R. L. Ami Indriyanto, Kerryn Lang, Lucky Lontoh, Nataliawati Siahaan, Damon Vis-Dunbar, et al. Indonesia’s Fuel Subsidies: Action plan for reform. International Institute for Sustainable Development, 2012. https://www.iisd.org/gsi/sites/default/files/ffs_actionplan_indonesia.pdf.

Wikipedia

{{cite report |last1=Braithwaite |first1=David |last2=Prasetyaning |first2=Alexander Chandra |last3=Indriyanto |first3=Diah R. L. Ami |last4=Lang |first4=Kerryn |last5=Lontoh |first5=Lucky |last6=Siahaan |first6=Nataliawati |last7=Vis-Dunbar |first7=Damon |last8=Wattimena |first8=Bobby A. |last9=Widhiantoro |first9=Unggung |display-authors=etal |title=Indonesia’s Fuel Subsidies: Action plan for reform |publisher=International Institute for Sustainable Development |date=March 2012 |url=https://www.iisd.org/gsi/sites/default/files/ffs_actionplan_indonesia.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{braithwaite2012indonesias, author = {Braithwaite, David and Prasetyaning, Alexander Chandra and Indriyanto, Diah R. L. Ami and Lang, Kerryn and Lontoh, Lucky and Siahaan, Nataliawati and Vis-Dunbar, Damon and Wattimena, Bobby A. and Widhiantoro, Unggung and Wooders, Peter}, title = {{Indonesia’s Fuel Subsidies: Action plan for reform}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = mar, url = {https://www.iisd.org/gsi/sites/default/files/ffs_actionplan_indonesia.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }