Indonesia plans pilot for direct electricity subsidy transfers

Mochamad Firman Hidayat, a member of the National Economic Council (DEN), has announced plans to pilot a new electricity subsidy scheme in Indonesia. The initiative aims to improve the accuracy of government assistance by shifting from subsidies embedded in electricity tariffs to direct cash transfers for eligible citizens.

Under the proposed pilot program, electricity rates in a selected region would be adjusted to market prices. To mitigate the impact on low-income households, the government would provide compensation through direct transfers to those who meet strict eligibility requirements. While the specific location, timeline, and transfer amounts have not yet been detailed, the council emphasized that the transition must be gradual to avoid placing undue economic burdens on the public.

To support this transition, the government is developing a digital social protection system. This system intends to improve data accuracy by allowing citizens to register via smartphones and utilizing data from eight different ministries and agencies to verify eligibility.