Tito Summa Siahaan – Indonesia's fuel subsidy must be targeted at the nation's poor even through reducing the fuel subsidy for others is politically difficult, a senior executive from the Asian Development Bank said on Monday.

"The richest 10 percent of households consume 40 percent of the total subsidized gasoline," Jon Linborg, the ADB's country director for Indonesia, said in an e-mail on Monday. "The top half of households use almost 84 percent of the total subsidized gasoline. So the poor benefit the least from it."

The government announced plans to raise the price of subsidized gasoline to Rp 6,000 from Rp 4,500 next month, which could save Rp 41.2 trillion ($4.5 billion) in the state budget. The government also planned to raise the electricity tariff in May, but delayed that to next year in order to ease the inflationary impact of the fuel price increase.

People, including laborers, students, nongovernment organization member and politicians, have gathered in widespread protests against the fuel price rise. Police and soldiers have been called upon to contain rallies that are expected to heighten today.

"Reducing fuel subsidies everywhere is not an easy process," Linborg said. "It involves difficult political process. But it is important to continue the dialogue that fuel subsidy reduction will benefit the poor, provided that the poor are protected from its initial negative impact through temporary inflation," Linborg said.

He cited the temporary cash assistance by the government as part of effort to ensure subsidies go to the poor.

Armida Alisjahbana, the minister of national planning and development, said the government needed to reform its energy subsidy policy.

"We now see that turmoil in the Middle East can easily influence the price of oil and investors increase the ante by buying oil contracts in commodities market. The period of cheap energy is over and now is the time for the government to reconfigure its energy subsidy policy."

It's a misconception that the fuel subsidy cuts are merely the basis for reducing the state budget deficit, Armida said. "It also speaks about energy security. But first the government needs to introduce and invest heavily into a viable alternative that can substitute for the country's reliance on cheap energy."

Armida is proposing the government to increase budget allocation to support fuel conversion program from oil-based fuel to gas-based fuel. The government has allocated Rp 965 billion for the program, but the ministry proposed to increased it to Rp 2.6 trillion.