AN INPUT TO INDONESIAN FUEL PRICE SYSTEM REFORMS

The report analyzes Indonesia's transition to a fuel pricing system that passes through international oil price changes to reduce wasteful subsidies, which saved IDR 195 trillion (US$ 15.6 billion) in the 2015 State Budget Revision. It compares Indonesia's historically low fuel prices with those of Southeast Asian nations and BRICS economies, noting that Indonesia's prices were among the lowest globally until recent reforms. The document outlines 'good practice' dimensions for pricing systems—subsidies, pass-through, transparency, and enforcement—and examines specific mechanisms used in China, India, Mexico, the Philippines, South Africa, and Thailand. It suggests that Indonesia manage price volatility not through subsidies, but via variable taxes, targeted social assistance, improved supply efficiency, and reduced energy demand.

• Indonesia's 2015 fuel pricing reform aimed to eliminate wasteful subsidy spending by passing international price increases to domestic consumers, resulting in fiscal savings of IDR 195 trillion (US$ 15.6 billion) in the State Budget Revision 2015.
• Historically, Indonesia maintained some of the lowest gasoline and diesel prices globally; as of November 2012, no other Southeast Asian country or BRICS nation had prices as low as Indonesia's.
• Public awareness regarding fuel subsidies in Indonesia is low, with only 44% of citizens knowing fuel is subsidized and only 4% aware of the specific government expenditure allocated to these subsidies.
• Good practice in fuel pricing involves four dimensions: ensuring prices cover production and distribution costs (subsidies), adjusting domestic prices for international market costs and exchange rates (pass-through), providing accessible information on price rules (transparency), and maintaining consistent rules for non-compliance (enforcement).
• Comparable countries use diverse mechanisms to manage prices: China uses a 10-day moving average trigger for adjustments; India and Mexico gradually removed diesel subsidies through small monthly adjustments; and South Africa uses a fixed formula including 'regional variations' to narrow the urban-rural price gap.
• To manage price volatility without returning to subsidies, the report recommends that Indonesia implement variable taxes, link assistance to high fuel prices for vulnerable groups, and invest subsidy savings into supply efficiency and energy demand reduction.

APA

Beaton, C., Toft, L., & Lontoh, L. (2015). AN INPUT TO INDONESIAN FUEL PRICE SYSTEM REFORMS. International Institute for Sustainable Development. https://www.iisd.org/sites/default/files/gsi/ffs_indonesia_pricing_exec.pdf

Chicago

Beaton, Christopher, Lasse Toft, and Lucky Lontoh. AN INPUT TO INDONESIAN FUEL PRICE SYSTEM REFORMS. International Institute for Sustainable Development, 2015. https://www.iisd.org/sites/default/files/gsi/ffs_indonesia_pricing_exec.pdf.

Wikipedia

{{cite report |last1=Beaton |first1=Christopher |last2=Toft |first2=Lasse |last3=Lontoh |first3=Lucky |title=AN INPUT TO INDONESIAN FUEL PRICE SYSTEM REFORMS |publisher=International Institute for Sustainable Development |date=March 2015 |url=https://www.iisd.org/sites/default/files/gsi/ffs_indonesia_pricing_exec.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{beaton2015input, author = {Beaton, Christopher and Toft, Lasse and Lontoh, Lucky}, title = {{AN INPUT TO INDONESIAN FUEL PRICE SYSTEM REFORMS}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = mar, url = {https://www.iisd.org/sites/default/files/gsi/ffs_indonesia_pricing_exec.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }