News / Asia

Fuel Subsidies Loom Large in Indonesian Transition Talks

FILE - Indonesian President Susilo Bambang Yudhoyono shakes hand with Joko
FILE - Indonesian President Susilo Bambang Yudhoyono shakes hand with Joko "Jokowi" Widodo during a meeting at the presidential palace in Jakarta, July 20, 2014.
VOA News

Indonesia's soaring fuel subsidies are expected to be a main topic of discussion this week when the country's incoming and outgoing presidents meet to discuss their political transition.

The meetings on Wednesday and Thursday, between President Susilo Bambang Yudhoyono and President-elect Joko Widodo, widely known as Jokowi, will take place on the island of Bali.

It will be the first face-to-face talks between the two men since a constitutional court ruling last week that upheld Widodo's election victory.

Widodo is expected to press Yudhoyono to lower fuel subsidies before he leaves office in October, giving the incoming administration more spending flexibility in the 2015 budget.

“I will ask many questions of President [Yudhoyono] regarding the problems in his administration, as well as unresolved issues and other programs that we might carry on, all figures that have been included in the 2015 [national budget],” Widodo said.

It is not clear if the current government will agree to make the politically unpopular move.

Energy Minister Jero Wacik, whose ministry oversees the subsidies, would only tell reporters Monday that all sides are in agreement that they should not be raised.

“We should not have to add more quota," he said.  "We’re all in agreement that the fuel subsidy is too high and should be [lowered].  The subsidy has depleted our budget.”

Economists have said that Indonesia needs to lower or eliminate the fuel subsidies to secure budget stability and make room for spending on infrastructure improvements, which Widodo has identified as a major priority.

Previous attempts to lower or eliminate the subsidies have failed, with some efforts leading to riots and mass protests.

This report was produced in collaboration with VOA's Indonesian service.

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