Jakarta. Indonesia is being urged to overhaul its fuel subsidy regime by shifting from blanket price controls to a targeted quota-based system, as analysts warn the current approach is draining state finances while missing its intended beneficiaries.

Energy observer Sofyano Zakaria said the government must move decisively to reform subsidy distribution, combining controlled pricing with consumption limits tied to individual eligibility, a model already adopted by Malaysia.

“If we don’t dare to change, we will keep burning state money without achieving fair outcomes,” Sofyano said in a statement on Thursday.

He pointed out that Malaysia has moved beyond simply offering cheap fuel, instead regulating consumption through quotas linked to citizen identity. Subsidized fuels such as RON95 are allocated at around 200 liters per person per month, with any excess consumption priced at market rates.

“Malaysia is no longer just selling cheap fuel, but determining who is eligible and how much they can consume. This is a bold and rational step,” he said.

In contrast, Sofyano criticized Indonesia’s subsidy policy for focusing heavily on keeping prices low while lacking effective distribution controls. As a result, subsidies are often enjoyed by higher-income groups, including owners of large vehicles and even industrial users.

“Indonesia seems reluctant to raise prices or limit consumption, allowing subsidies to be captured by those who are not entitled, including large vehicle owners and industry,” he added.

He stressed that subsidy efficiency is not about maintaining low prices, but ensuring precise targeting. Indonesia’s current monitoring system,  which relies on vehicle registration and barcode tracking, still leaves room for abuse, including repeated refueling and illegal redistribution.

“This is not about cheap or expensive, but about whether subsidies are well targeted. Malaysia’s individual-based approach is harder to manipulate,” he said.

While acknowledging potential public resistance and pressure on transport operators, Sofyano warned that Indonesia’s current price stability is misleading and comes at a high fiscal cost.

“Indonesia may appear socially stable because prices are kept low. But this is a false stability. It is costly. The state budget is burdened, and subsidies are not well targeted,” he said.

Data from the Energy and Mineral Resources Ministry shows that fuel imports reached 31.95 million kiloliters in 2024, marking a 60.31% increase over the past five years and accounting for roughly 40% of national demand. Meanwhile, daily fuel consumption stood at around 232.42 thousand kiloliters daily as of September 2025, with imports projected at 24–25 million kiloliters for the year.

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