Energy Subsidy Efficiency to Increase Productive Spending

At the start of President Joko Widodo's administration, the government cut energy subsidy spending due to its perceived inefficiency and lack of targeted impact. These funds were reallocated to productive government spending, such as education, healthcare, and infrastructure. As a result, the government was able to maintain education and healthcare budgets at 20 percent and 5 percent of national spending, respectively.

In the 2017 State Budget (APBN), the government allocated Rp 77.3 trillion for energy subsidies, a 77.4 percent decrease compared to 2014's Rp 341.8 trillion. Meanwhile, the infrastructure budget in the 2017 APBN reached Rp 387.3 trillion, a 50% increase from Rp 154.6 trillion in 2014. Similarly, the education budget in 2017 increased by 10.8 percent to Rp 416.1 trillion, and the healthcare budget increased by 70.2 percent from its 2014 level.

The government eliminated fuel subsidies for Premium gasoline in January 2015 and implemented a fixed subsidy of Rp 1,000 per liter for Solar diesel. Kerosene continues to receive a subsidy of Rp 500 per liter.