Database Overhaul Key to Energy Subsidy Reform Success, Say Experts

Anissa Suharsono, Senior Policy Advisor at the International Institute for Sustainable Development (IISD), stressed that overhauling the recipient database is crucial for the success of energy subsidy reforms in Indonesia. This step is vital for ensuring subsidies are accurately targeted, maintaining fiscal stability, and accelerating the energy transition.

Speaking at a Kompas.com event, Suharsono clarified that energy subsidy reform should not be equated solely with fuel price increases. Instead, it requires a comprehensive overhaul of the entire subsidy distribution system. "When we talk about energy subsidy reform, don't immediately interpret it as a price hike. This is a reform of the system as a whole," she stated.

Suharsono outlined an ideal reform process starting with refining the beneficiary database, followed by establishing compensation mechanisms, transparent public communication, and a complaint system post-implementation. Drawing from international examples like India, she suggested a gradual, five-to-ten-year approach to build public trust.

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When we talk about energy subsidy reform, don't immediately interpret it as a price hike. This is a reform of the system as a whole.

Andri Satrio Nugroho, Head of the Center of Industry, Trade and Investment at INDEF, emphasized the need for government transparency regarding the use of funds saved through efficiency gains. He believes the public should clearly understand the benefits of reallocating subsidy spending to more productive sectors. Nugroho also highlighted ongoing subsidy leakage due to affluent groups benefiting, underscoring the need to prioritize low-income households.

Meanwhile, Deputy Speaker of the People's Consultative Assembly (MPR) Eddy Suparno advocated for "right sizing" and "right targeting" in subsidy reforms to ensure aid reaches the deserving. He supports shifting from commodity-based subsidies to direct cash transfers to beneficiaries, backed by accurate data. "Subsidy reform is not to reduce protection for the community. This reform is about changing how the state protects its citizens to be fairer and more efficient," Suparno remarked.

Fitra Faisal, a Government Communication Body Expert Staff, affirmed the government's commitment to accelerating the energy transition through clean energy programs. Teguh Yudo Wicaksono, Dean of the Faculty of Economics and Business at Universitas Islam Internasional Indonesia (UIII), views subsidy reform as an urgent task, essential for energy security, fiscal space, and national energy independence.

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Subsidy reform is not to reduce protection for the community. This reform is about changing how the state protects its citizens to be fairer and more efficient.