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Iran makes its own problem, they should lift oil subsidy to their people and their people must accept that since the price is too low. The oil subsidy can be allocated to productive program like infrastructure or improving their state owned industry. It is wrong to say that floating gasoline price will create inflation.
Just see Indonesia case, under SBY administration we hugely subsidize the gasoline price and the inflation rate is around 8 percent during his time (The inflation was huge since Asian Financial Crisis), while under Jokowi gasoline price is pretty much floating and inflation is down since 2015 into around 3 percent until 2019 and in 2020 it post record low, I dont remember the number but I think it is 2 percent. For information, Jokowi takes power since November 2014.
I can try to give reason on how the inflation can be decreased, but maybe in other time since it can make me write quite long. But the main reason is to make the price is not too sensitive anymore when the oil price is increasing, as in the old days price will be hiked by businesses (small, medium, large) as government hike gasoline price, but of course there should be tactic and also some time before the market can act like that.
For Indonesia the secret is that our state owned energy companies (Pertamina) that dominate the market start making high quality gasoline and the price is floated and the low quality one is still pegged at certain rate as usual. As Today car and motorcycle has different engine and it requires high quality gasoline, so people is forced to buy the high quality one in order not to make the engine broken if they use the low quality one.........
So since gasoline price start depending on oil market, it can increase and decrease. Since it keeps changing so businesses then see the changing oil price as reality of life that should be accepted, like other commodity price fluctuation. It makes them not rush hiking their products every time the gasoline price increases.
Any way we have plan to abolished that low quality gasoline soon, so there will be no subsidy anymore for gasoline inshaAllah. Despite so that type of gasoline is not much anymore, majority of people have migrated to buy high quality gasoline so the subsidy budget has been reduced significantly.
Our next policy is to reduce the subsidy for small gas tube for cooking by only giving subsidy to the poor. In Indonesia we have large and small gas tube while small gas tube is being subsidized since gov think only poor buy it. But as many people keep buying the small tube gas despite their economic condition is not poor so Gov want to abolish that policy while keep giving subsidy to the real poor people.
Just see Indonesia case, under SBY administration we hugely subsidize the gasoline price and the inflation rate is around 8 percent during his time (The inflation was huge since Asian Financial Crisis), while under Jokowi gasoline price is pretty much floating and inflation is down since 2015 into around 3 percent until 2019 and in 2020 it post record low, I dont remember the number but I think it is 2 percent. For information, Jokowi takes power since November 2014.
I can try to give reason on how the inflation can be decreased, but maybe in other time since it can make me write quite long. But the main reason is to make the price is not too sensitive anymore when the oil price is increasing, as in the old days price will be hiked by businesses (small, medium, large) as government hike gasoline price, but of course there should be tactic and also some time before the market can act like that.
For Indonesia the secret is that our state owned energy companies (Pertamina) that dominate the market start making high quality gasoline and the price is floated and the low quality one is still pegged at certain rate as usual. As Today car and motorcycle has different engine and it requires high quality gasoline, so people is forced to buy the high quality one in order not to make the engine broken if they use the low quality one.........
So since gasoline price start depending on oil market, it can increase and decrease. Since it keeps changing so businesses then see the changing oil price as reality of life that should be accepted, like other commodity price fluctuation. It makes them not rush hiking their products every time the gasoline price increases.
Any way we have plan to abolished that low quality gasoline soon, so there will be no subsidy anymore for gasoline inshaAllah. Despite so that type of gasoline is not much anymore, majority of people have migrated to buy high quality gasoline so the subsidy budget has been reduced significantly.
Our next policy is to reduce the subsidy for small gas tube for cooking by only giving subsidy to the poor. In Indonesia we have large and small gas tube while small gas tube is being subsidized since gov think only poor buy it. But as many people keep buying the small tube gas despite their economic condition is not poor so Gov want to abolish that policy while keep giving subsidy to the real poor people.
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