Jakarta, CNBC Indonesia – 2025 is only five months away and it seems that people are starting to complain about planned price increases, some taxes and wage cuts. Today only, PT Pertamina (Persero) officially changed the price of non-subsidized fuel oil (BBM), especially the Pertamax type (RON 92), which will take effect today, Saturday (10 /8/2024).
Pertamina announced changes to fuel prices last Friday night through Pertamina’s official website. Previously, Pertamina through PT Pertamina Patra Niaga had also officially increased the prices of four types of non-subsidized fuel products in all regions on August 2.
The non-contributory fuel types that received an increase on August 2 were Pertamax Green (95), Pertamax Turbo (RON 98), Dexlite (CN 51), and Pertamina Dex (CN 53). The four types of non-subsidized fuel have an average increase of around IDR 300 to IDR 1,100 per liter.
In fact, the Indonesian government will clarify who has the right to buy subsidized fuel such as Pertalite (RON 90) and subsidized diesel. This will be announced later in a regulation that is still being developed by the government.
Previously, there was news that vehicles would be banned from using subsidized fuel in the future cubic centimeter (CC) which is above 2,400 CC in the same class as the Pajero and Fortuner.
The Secretary General of the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said that the Fortuner and Pajero are ‘good’ cars. He also questioned the suitability of subsidized diesel fuel specifications for use in these cars.
“Do you think it’s worth it (Pajero and Fortuner)?” The car seems to be good too,” said Dadan when asked if he can buy cars like the Pajero and Fortuner diesel with subsidy, when they meet in his office, Jakarta, announced on Saturday (10/8 /2024).
Despite the beginning of the increase in oil prices, at the beginning of 2025 only, there will be an increase in Value Added Tax (VAT) and an increase in BPJS Health contributions. In fact, this can be a burden on society and has the potential to reduce purchasing power.
The following is a list of the increases that will occur in 2025.
1. VAT increase to 12%
The indication that the rate of value added tax (VAT) will continue to rise to 12% in 2025 is increasingly clear.
Coordinating Economic Affairs Minister Airlangga Hartarto said the tariff increase was clearly mandated by the Law on Fiscal Relations between the Central Government and Provincial Governments (UU HKPD).
“The law is clear. If something is not related to the law, there is nothing,” said Airlangga in his office, Jakarta, Thursday (8/8/2024).
Nevertheless, Airlangga emphasized that whether the decision to increase VAT will be included in next year’s APBN will have to wait for the decision of President Joko Widodo, when read are the finance note and the APBN Bill 2025.
“So we will just monitor the financial notes later. Later we will just listen to the financial notes,” he stressed Airlangga.
The government has also simulated the implementation of an increase in the VAT rate to 12% in early 2025. However, its implementation still depends on the decision of the government President-elect Prabowo Subianto.
“We have simulated the advantages and disadvantages, around what is possible, and then the impact on the business sector, that’s it,” said Susiwijono in his office, Jakarta, Monday (5 /8/2024).
According to the provisions of the HPP Law, it is obliged to implement a 12% VAT rate from January 1, 2025. However, since there was a request from the business sector, especially entrepreneurs who are members of the Indonesian Chamber of Commerce and Business (Kadin) to turn it off, the simulation was done to see the effect.
“If the potential impact is easy to calculate, an increase from 11% to 12% means an increase of 1%, 1 in 11 means 10% of the total VAT that we ‘ understood per year as IDR 730 trillion, which means an increase of approx. IDR 70 trillion,” stressed Susiwijono.
“Calculate the economic impact and what will happen with that, then it is necessary to compare the capabilities of our industry and industry and so on,” he said.
2. Increase in BPJS health contributions
BPJS Health contributions are reported to increase in 2025. As BPJS Chief Health Director Ali Ghufron Mukti said.
Despite this, the Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that the government had not yet discussed the contribution levels to be increased.
“We have not discussed it between the relevant ministries yet,” Airlangga said in his office, Jakarta, Friday (9/8/2024).
As is known, the Chief Health Director of BPJS, Ali Ghufron Mukti, indicated that the contribution amount would only increase for classes I and II.
The increase in contribution rates will be implemented ahead of the implementation of the normal class of patients (KRIS) starting on June 30 2025, which is regulated in Presidential Regulation (Perpres) Number 59 of 2024.
“Yes, (taxes) can increase. And now is the time to increase,” he said at the Grand Ballroom Krakatau TMII, East Jakarta, quoted from CNN Indonesia, Thursday (8/8/2024).
At the same time, he ensured that the fees for class III participants would not change because these participants were generally Grant Aid Recipients (PBI).
“If it’s class III, it won’t go up. That’s class III, I’m sorry, PBI is usually class 3,” he said.
Unfortunately, Ghufron has not announced when the amount of BPJS Health contributions will be increased. However, he confirmed that this policy would be regulated in a Presidential Decree (Perpres).
At this time, Ghufron also emphasized that the BPJS Health contribution level would not be made one level. This means that each class of participants will still pay according to their share.
3. Possible increase in fuel costs
The government plans to cut fuel subsidies in 2025. If this is true, people will have to prepare for an increase in fuel prices next year.
This policy plan is published in the Macroeconomic Framework and Fiscal Policy Principles for 2025. In this document, the government encourages the control of consumer sectors for Pertalite and Diesel fuel.
The increase in fuel consumption as well as retail prices which are below economic prices increase the burden of subsidy and compensation. Furthermore, the current distribution of subsidized fuel is considered inappropriate as it is mostly enjoyed by wealthy households.
With balanced user control, it is estimated that it can reduce the amount of diesel and Pertalite consumption by 17.8 million KL per year.
“The overall simulation of energy subsidy and compensation reform is expected to bring budget efficiency of IDR 67.1 trillion per year,” as stated in the 2025 Macroeconomic Framework Document and Fiscal Policy Principles, last Friday (24/ 5/2024).
4. Possible increase in LPG gas prices
Apart from planning to cut fuel subsidies, the government also plans to cut subsidies for Liquefied Petroleum Gas (LPG) or Elpiji gas to 3 kg. In fact, it is planned to transfer the subsidy to Direct Cash Assistance (BLT).
The Deputy Chairman of Commission VII DPR RI, Eddy Soeparno, said that the government plans to change the subsidy scheme for 3 kg cylinder gas products or melon gas to BLT.
However, he said that this plan was still in the discussion stage of the Ministry of Energy and Mineral Resources (ESDM) together with the DPR.
“The Ministry of Energy and Mineral Resources has discussed this with us (DPR) in this regard (the plan to change the 3 kg LPG subsidy scheme). Since we are protesting, I am personally protesting that the target is to provide subsidies for 3 kg LPG. it is not appropriate, because 80% of the users are rich people,” Eddy told detikcom, Tuesday (16/7/2024).
Nevertheless, according to him, it is estimated that changes to the melon gas subsidy scheme will only be confirmed at the end of 2025. So if it is true that the subsidy scheme will be replaced, it will not be possible for the This step will come into effect only in 2026.
As the provision of 3 kg LPG subsidy will later refer to the Data Integrated Social Benefits (DTKS) to ascertain exactly which recipients are eligible and who are not. In fact, currently according to Eddy there is still something that needs to be improved with the current DTKS so that the provision of assistance is more targeted.
“Now DTKS is the reference (for providing social assistance). That’s why this process takes time, because you have to prepare the infrastructure for the move. Because every recipient must have a bank account. It is estimated that there is no less than 5%. they have a bank account because they are in remote areas once, that’s the gift,” he said.
In fact, if the 3 kg LPG gas subsidy is moved, there is a possibility of a very high price hike. Commission VII DPR RI published the original price or the economic price of the LPG cylinder.
“In every 3 kg LPG cylinder, there is a government subsidy of Rp. 33 thousand. So if the current price is let’s say Rp. 20 thousand, that means the economy is Rp. 53 thousand, right ?More or less if the economy is like that,” said Soeparno CNBC Indonesia.
It is estimated that the value of the LPG subsidy will increase by 3 kg in the next few years. Because it is believed that the DPR and the government agree that there will be an increase in LPG consumption in Indonesia in 2025.
Previously, the government aimed to cut energy subsidies and compensation by IDR 671 trillion by 2025. This can be achieved if the transformation of energy subsidies and compensation can be done in the short term or next year .
CNBC INDONESIA RESEARCH
2024-08-10 12:45:00
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