Purnomo Yusgiantoro said the government expects to cut consumption of subsidised fuel to save some 3.4 trillion rupiah (S$511 million) this year.

Indonesia currently subsidises fuel for transport and household use, amounting to about 60 per cent of national consumption.

Under the plan, vehicle owners will be given 'smart cards' to record their consumption of subsidised fuel, and will have to pay the full market price once they have reached their limit.

'The government will try out the 'smart card' system in Bali or Batam in April,' Mr Yusgiantoro said, adding he expects the system to be implemented across Indonesia in the second half of this year.

Last year, President Susilo Bambang Yudhoyono ruled out increasing government-set fuel prices despite the rise in oil prices, which has forced the government to make spending cuts elsewhere. -- AFP