Indonesia's Transport Society Urges Fuel Subsidy Shift to Public Transit

The Indonesian Transportation Society (MTI) is advocating for a significant shift in government spending, proposing that a portion of fuel subsidies be redirected towards developing public transportation. MTI argues that investing in public transit infrastructure would yield broader benefits for the public compared to continuing to subsidize fuel consumption, which primarily benefits private vehicle owners.

Djoko Setijowano, an MTI advisor, highlighted that fuel subsidies fluctuate annually and place a considerable burden on the state budget. He noted that while the transportation sector consumes about 40 percent of national fuel, data shows 93 percent of subsidized fuel goes to private cars and motorcycles, with only a small fraction reaching freight and public passenger transport.

MTI's proposal comes as the government grapples with fluctuating energy expenditures. Realized BBM subsidies were Rp551.2 trillion in 2022, decreasing to Rp375 trillion in 2023 and Rp113.3 trillion in 2024, but projected to rise again. The organization stresses that a robust public transportation system is a key indicator of a developed nation and must be prioritized for Indonesia's "Golden Indonesia 2045" target.

Currently, only about nine percent of Indonesia's 514 local governments have developed modern public transport services, and many of those struggle with financial independence. MTI suggests that funds allocated for electric vehicle subsidies could also support local governments in building public transport, or be prioritized for remote and border regions with limited fuel supply.