Parliament: Electric vehicle subsidies are not well-targeted

Jakarta – Members of the House of Representatives (DPR) said that electric car subsidies are not well targeted, and should be prioritised for public transportation. The timing of the subsidy when the rupiah exchange rate is low is also considered inappropriate.

Member of Commission VII of DPR, Mulyanto regretted that electric vehicle subsidies were given to private individual vehicle owners. “We reject subsidies to buy luxury goods for the rich,” he said.

Mulyanto said, it is inappropriate to subsidise electric vehicles when there is a decline in the rupiah exchange rate against world crude oil prices. In the House of Representatives plenary session last week, the government presented the macro assumptions of the 2024 Draft State Budget with the rupiah exchange rate against the dollar proposed at IDR 14,700-IDR 15,300 and the crude oil price at USD 75- USD 85 per barrel.

These assumptions are already far below the conditions when subsidised fuel prices were raised in September 2022, with a rupiah exchange rate of IDR 15,500 per US dollar, while world crude oil prices were more than USD 110 per barrel.

With the reduced budget burden for fuel subsidies in 2024, he asked the government to continue allocating the budget difference for fuel subsidies so that subsidised fuel prices can be reduced for diesel fuel and Pertalite (mid-range octane fuel).

“Do not use the budget difference from the decline in world oil prices above to subsidise electric cars,” Mulyanto said.

In addition, the government is asked to immediately implement restrictions on the distribution of subsidised fuel so that it is not used for luxury cars. He emphasised that the essence of subsidies is to be given to the underprivileged in order to increase their purchasing power. (Hartatik)

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