Monday, June 2, 2008

Fuel subsidies hurting Indonesia: Pertamina executive

[ AFP ]

SINGAPORE (AFP) — Fuel subsidies in Indonesia are hurting the economy, sucking away precious funds which could have been better used in other areas such as health and economic development, an Indonesian oil executive said Sunday.

The country cannot go on indefinitely subsidising fuel and bold decisions are needed from the government to address the situation, said Widhyawan Prawiraatmadja, a senior vice president with state-owned Pertamina.

"When you continue subsidising oil, there will be some distortion," he said.

"I think the government will have to start making some bold efforts to rectify this, otherwise this is going to continue and perhaps even get worse because of the distortion in the market," he said.

Prawiraatmadja, who was speaking at an Asia security summit in Singapore, said his comments do not reflect that of his employer.

The Indonesian government recently hiked fuel prices by almost 30 percent in what it said was a move to save the budget from the swelling cost of its multi-billion-dollar subsidy scheme on the back of soaring global oil prices,

Fuel prices have been heavily subsidied in Indonesia and since the fuel hike was announced, protests have occurred almost daily across the country.

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