MANILA, Philippines — As it plans to slip away from its subsidy-laden scheme in its petroleum industry, oil-rich Indonesia is looking at the Philippine experience on its “as-needed fuel assistance program” as a likely option.

The Philippine style-fuel subsidy was packaged under the “Pantawid Pasada” program. It was designed as discount rates which drivers of jeepneys and tricycles may avail of in their purchase of diesel and gasoline products. The amount was earmarked by Malacañang through DoE from the government’s royalty share in the Malampaya gas project.

“Indonesia is studying the Philippine government’s fuel assistance program popularly known as “Pantawid Pasada” being given to public utility jeepneys and tricycles as a possible substitute for its state-funded subsidy on fuel prices,” Energy Secretary Rene D. Almendras has noted.

The Indonesians’ inexorable addiction to fuel subsidies is seen weighing down on their government’s financial resources, especially with recent reports that the country’s oil reserves has already started running down. Similar development has also been weakening its membership position in the commanding cartel of the Organization of Petroleum Exporting Countries.

Almendras further bared that Indonesia’s plan would be to implement a program akin to the Philippines’ “Pantawid Pasada” program. What is being initially thought out, he said, would be “a similar subsidy program to be granted to specific sectors aimed at helping their government maximize the funds allocated every year.”

The extent of subsidies being shelled out by the Indonesian government for its fuel sector has been whopping – in fact, it was on steady incline from $9.9 billion in 2007; $13.7 billion in 2008; $15.3 billion in 2009 and $15.6 billion in 2010 – running to a total of $75.9 billion in the last five years, including the $9.4 billion and $12.0 billion subsidies in 2005 and 2006.

In a study undertaken by the British Embassy in Manila, Economic Attache Mark Emmanuel Canlas highlighted that the “fossil fuel subsidies in Southeast Asia have been costly, regressive and growth-impeding.”

Malaysia is another country in the Asean region with exorbitant fuel subsidies, totaling $20.6 billion from 2005 to 2010; Thailand is next, logging $7.3 billion worth of subsidies for the five-year stretch; while Vietnam has $2.3 billion in the same period. Singapore and the Philippines are already placed on the zero-subsidy zone.

The study-author explained that “financing subsidies are inefficient as taxes need to be raised on other goods;” emphasizing further that “providing subsidies can take away resources for health and education.”

If the fuel subsidies would be removed in the specified countries in the region, the study noted that this may help increase their gross domestic product (GDP) growths by 0.1 to 0.7-percent annually.

By the same token, when the subsidies are phased out, it is expected that gas-guzzling motorists would be more disciplined on their consumption, hence, this is seen reducing carbon dioxide emissions by 13-percent, as referenced on the year 2050 base case.

Efficiency gains will also be realized as “mispricing and market distortions” would cease as impediments along market dynamics.