Indonesias work-from-home policy has cut subsidised fuel use by 9%, says minister

JAKARTA – The Indonesian government's work-from-home policy introduced to minimise subsidised fuel usage amid skyrocketing oil prices has substantially reduced nationwide consumption.

Coordinating Economy Minister Airlangga Hartarto said on May 26 that the policy had brought down the use of Pertalite, a subsidised petrol brand from state-owned energy firm Pertamina, by almost 9 per cent in April and May.

“The result was pretty good, that's why we have decided that [the measure] will be continued,†he said, adding that the Administrative and Bureaucratic Reform Ministry would issue a regulation to extend the policy.

The policy states that all civil servants in central and regional government offices, totalling more than five million people according to the most recent documentation, spend one day a week working from home, and the government has encouraged the private sector to do the same.

Exemptions to the policy apply to government workers in what it considers essential sectors, i.e. healthcare, security, energy, water and food supply, transportation, logistics, trade and finance.

The policy came into force on April 1 and is to be reviewed every two months. The extension will make the policy effective until the end of July.

Introduced to push down subsidised fuel consumption, which is a heavy burden on the state budget, the policy is part of a package of government measures in response to global oil prices skyrocketing after the US and Israel attacked Iran on Feb 28.

The measures also include rationing subsidised fuel sales, cutting officials' use of state vehicles by half and their work travel budgets by 50 per cent for domestic trips and 70 per cent for overseas trips and cutting spending across the board.

The government estimated that the policy package could save the state some 65 trillion rupiah (S$4.65 billion), depending on how long it remains in place.

The government subsidises certain types of fuels to keep consumer prices at fixed levels, typically well below global market prices, and uses the state budget to cover the difference.

The amount allocated for fuel subsidies in the 2026 budget is based on an assumed average oil price of US$70, which means the state must spend more than planned on subsidies if the market price averages higher than the assumed level.

The Middle East crisis has pushed Brent crude prices to more than US$100 per barrel from around US$72 per barrel before it began.

The Energy Shift Institute (ESI) estimates that every dollar increase in global oil prices drives up the state's fuel subsidies bill by seven trillion rupiah on top of the hundreds of trillions already earmarked.

The government could pass the burden on to consumers by increasing the prices for subsidised fuels, but that is a politically fraught option and would take a toll on economic growth.

Mr Airlangga has revealed that the government will roll out a second consumer stimulus package in 2026, focused on boosting household spending and job creation, which includes transportation discounts similar to the one previously enforced alongside tax incentives for some professions and expanding vocational programmes. THE JAKARTA POST/ASIA NEWS NETWORK