Effects
of Changes in Energy Pricing Policy
to Gross Domestic Product (GDP) of Industry
Sector
in Indonesia: a Computable General Equilibrium Analysis Model
by Sri Indah Nikensari
Policy of reducing the amount of
fuel and electricity subsidy in the 2001 budgeting by the Indonesian government
have consequences on the increase in fuel prices and electricity. Although the
price of fuel and electricity have always experienced an increase from year to
year, but the increase of the price in 2001 was mainly caused by a decrease in
the amount of subsidies in the state budget, as the budget since 1997/1998 to
fiscal year 2000, the number of fuel subsidy continues to increase due to
rising procurement costs. Upon the recommendation of the IMF, in connection
with the disbursement of relief packages and donor countries who are members of
the Indonesian CG1, fuel and electricity subsidies recommended immediately
removed so that there is efficiency in the state budget. Plans removal of fuel
subsidy and the amount of electricity in the state budget is planned in stages
and will expire in 2004. Reduction in the amount of subsidy brings a very broad
multiplier effects on the economy, including the GDP. This is demonstrated by
the simulation results with the model INDECGE with base year 1998, which states
that in the short term the increase in energy prices still have a positive
impact on the increase in Sector’s GDP and Expenditure’s GDP with percentage
decreased, but in the long term increase in energy prices will provide negative
impact on the GDP of all sectors, except for the sector remaining subsidies,
with the remarks that the current economic conditions there was no improvement
of the condition of the base year 1998. In addition to Government Consumption,
there is a positive impact of the fuel subsidy reduction on all the variables
such as GDP Household Consumption Expenditure, Gross Fixed Capital Formation
(GFCF), Stock Inventory, Exports and Imports.
2002
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