ST Global Forum: Widodo's move to raise fuel price is politically astute, says ANZ's chief economist

Straits Times foreign editor Ravi Velloor (left) with Professor Kishore Mahbubani. -- ST PHOTO: NG SOR LUAN
Straits Times foreign editor Ravi Velloor (left) with Professor Kishore Mahbubani. -- ST PHOTO: NG SOR LUAN

SINGAPORE -  Indonesian President Joko Widodo's recent move to raise subsidised petrol price by over 30 per cent was "absolutely correct", and its timing was "politically astute", ANZ's chief economist Glenn Maguire said.

"The election cycle is five years. It's always better to get very tough decisions out quite early, rather than later in the cycle," Mr Maguire said in a panel discussion at The Straits Times Global Outlook forum on Friday.

At the same forum, Mr Endy Bayuni, senior editor of The Jakarta Post, said the cut in government spending on imported fuel provided an "immediate breathing fiscal space, and he (Mr Widodo) did that quite effecitvely".

ST 20141022 OUTLOOK22B 760340m

Mr Bayuni said there were some pockets of protests but not massive demonstrations against the government.

The fuel subsidy cut is meant to generate billions of dollars in savings and is the first concrete sign of Mr Widodo's commitment to reforming the country's economy.

The subsidy is forecast to cost US$21 billion (S$27.3 billion) this year, or 13 per cent of Indonesia's budget.

Mr Bayuni said Mr Widodo's bold move to cut fuel subsidy early in his term is one of the signs that show Indonesia's new president is "very different" from his predecessor Susilo Bambang Yudhoyono.

rdancel@sph.com.sg