Vehicles are refueled at a PT Pertamina gas station in Nusa Dua, Bali, Indonesia.
The president-elect, who takes office Oct. 20, said this week the timing and magnitude of the increase is still being calculated, even after a member of his team spoke of a possible 46 percent adjustment by November. With parties loyal to the defeated presidential candidate, Prabowo Subianto, currently controlling more than half of the parliament, political resistance could complicate any change in the fuel policy.
A 1,500 rupiah increase could be absorbed within the budget currently, while a 3,000 rupiah increase is a “best-case scenario,” said ANZ’s Wilson. Jokowi probably would have to go to parliament for a more-than 2,000 rupiah change, to get a vote on an assistance package, and “he might not be able to easily push that through,” he said.
Fuel prices
Jokowi could raise fuel prices 15 percent to 30 percent in early 2015, according to economists at Morgan Stanley, ANZ, PT Bank Mandiri and DBS Group Holdings Ltd. Anything less than a 40 percent increase would be insufficient to narrow the current-account gap, said PT Bank Central Asia, countering the central bank’s estimate that a 15 percent increase in gasoline costs would narrow the current-account deficit by as much as $1 billion.
The price of subsidized gasoline at the pump was most recently raised in 2013 to 6,500 rupiah per liter from 4,500 rupiah. PT Pertamina’s unsubsidized price is currently 11,800 rupiah per liter in Jakarta.
Indonesia’s gasoline imports will rise to 354,000 barrels a day in 2015 from 312,000 this year, without a fuel price increase, said Suresh Sivanandam, a senior downstream analyst at Wood Mackenzie Ltd., an energy intelligence company.
“We still believe gasoline demand in Indonesia will grow on the basis there will be a rise in income levels,” he said in a Sept. 23 interview from Singapore. “We don’t see any big changes to the trade balance because we’re not seeing new refineries coming from Indonesia.”
Domestic car sales averaged 104,601 units per month in the second half of last year following the last gasoline-price increase, compared with 100,372 in the first six months, according to figures on PT Astra International’s website. Sales have averaged 103,800 a month this year.
Worsening traffic
On Indonesia’s most-populous island of Java, where 143 million people live in an area about the size of Illinois, gridlock is commonplace. Worsening traffic makes people more likely to opt for bigger vehicles because they have to spend more time in them, said Aditya Srinath, a stocks analyst who covers the auto industry at JPMorgan Securities Indonesia in Jakarta.
Tata Motors’ Jain says he thinks gradually increasing the fuel price will eventually make Indonesians more likely to buy smaller cars. Yet weaning Indonesians off their addiction to cheap fuel will take time.
“What we saw from last year to this year, is that Indonesia’s subsidized fuel demand has actually proved quite inelastic,” Srinath said in a Sept. 18 interview. “So I don’t expect another increase to have a significant impact on fuel demand” or the current account, he said.
Đăng ký: VietNam News