国际可持续发展研究所-印尼液化石油气补贴改革：国际经验教训（英文）-2021.5-39正式版

LPGSubsidy

Reformin

Indonesia:

Lessonslearnedfrom

internationalexperience

GSIREPORT

JonasKuehl

MarthaMaulidia

KavyaBajaj

SilkeBoelts

©2021InternationalInstituteforSustainableDevelopment|

IISD.org

/gsi May2021

LiquefiedPetroleumGasSubsidyReforminIndonesia:

Lessonslearnedfrominternationalexperience

©2021InternationalInstituteforSustainableDevelopmentPublishedbytheInternationalInstituteforSustainableDevelopment

Thispublicationislicensedundera

CreativeCommonsAttribution-

NonCommercial-ShareAlike4.0InternationalLicense

.

InternationalInstituteforSustainableDevelopment

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GlobalSubsidiesInitiative

TheIISDGlobalSubsidiesInitiative(GSI)supportsinternationalprocesses,nationalgovernmentsandcivilsocietyorganizationstoalignsubsidieswithsustainabledevelopment.GSIdoesthisbypromotingtransparencyonthenatureandsizeofsubsidies;evaluatingtheeconomic,socialandenvironmentalimpactsofsubsidies;and,wherenecessary,advisingonhowinefficientandwastefulsubsidiescanbestbereformed.GSIisheadquarteredinGeneva,Switzerland,andworkswithpartnerslocatedaroundtheworld.ItsprincipalfundershaveincludedthegovernmentsofDenmark,Finland,NewZealand,Norway,Sweden,SwitzerlandandtheUnitedKingdom,aswellastheKRFoundation.

LiquefiedPetroleumGasSubsidyReforminIndonesia:Lessonslearnedfrominternationalexperience

May2021

WrittenbyJonasKuehl,MarthaMaulidia,KavyaBajaj,andSilkeBoelts

Acknowledgements

Theauthorsaregratefultopeerreviewerswhosecommentshavehelpedtoimproveearlierdraftsofthispaper:

DellaY.A.Temenggung,DeputyDirector,Advisory&Policy,Prospera

RullanRinaldi,SeniorCoordinator(PrivateSectorDevelopmentandEconomicInclusion),Prospera

AstridDita,SeniorBudgetPolicyAdvisor,Propsera

GlobalSubsidiesInitiative

InternationalEnvironmentHouse2,

7–9chemindeBalexert1219ChâtelaineGeneva,SwitzerlandCanadaR3B0T4

Tel:+1(204)958-7700

Website:

/gsi

Twitter:

@globalsubsidies

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LiquefiedPetroleumGasSubsidyReforminIndonesia:

Lessonslearnedfrominternationalexperience

ExecutiveSummary

Indonesia’sliquefiedpetroleumgas(LPG)subsidiesarenotonlyanincreasingdrainonthecountry’sbudget,buttheyarealsoinefficientfromasocialequityperspective,asmostofthesubsidiesgotothewealthiersegmentofthesociety.TheIndonesiangovernmentisthereforeplanningtotargetLPGsubsidiesthroughacloseddistributionsystemsothataccessislimitedtothepoorsegmentsofsociety.Severalschemeswereproposedinthepast,includingbytheNationalTeamfortheAccelerationofPovertyReduction(TNP2K),whichsuccessfullypilotedaschemewheretheeligibilityofregisteredbeneficiariesforsubsidizedLPGcylinders(basedontheelectricitysubsidydatabase)areverifiedthroughbiometricstechnology.Despiteacommitmentfromthegovernmenttochangethepolicy,theimplementationofsuchaclosedsystemwasdelayedrepeatedlyoverthelastfewyears,justifiedby,amongothers,thehardshipoftheCOVID-19crisis.Andindeed,Indonesia’seconomycontractedbymorethan2%,andthebudgetdeficitwidenedtomorethan6%.Theoutlookofthedeficitremainsworrisomefor2021.

Yet,otheremergingeconomieshaveshownthattimesofcrisisdonotnecessarilyneedtoresultinbacktrackingintendedpolicyreforms—theycanalsoprovideanopportunitytoreformfossilfuelpricingandstrengthenacountry’swelfarestate.Notably,IndiaincreasedfueltaxesduringtheCOVID-19crisistogenerateextrarevenueandalsostrengthenedsocialprotectionsforthepoorbyprovidinguptothreeLPGcylindersfreeofcharge.Inaddition,Mexicoaddedanenergycomponenttoitsconditionalcash-transferprogramduringtheGreatRecessionof2008/09toensurecontinuousenergyaccessforthepoor.

Threecasestudiesandananalysisofthelessonsthatcanbelearnedfromeachcountry’sexperienceareattheheartofthisreport.Basedonthatanalysis,wehavethefollowingfourrecommendationsforIndonesia’sLPGsubsidyreform:

IndonesiashouldshiftLPGsubsidiesawayfromthewealthyandusethemoneytosupportthosewhosuffermostfromthecrisis.

IndonesiashouldaccompanyLPGsubsidyreformwitharobustdatacollectionprocesstoensurethatallintendedbeneficiariesretainaccesstosubsidizedLPG.

IndonesiashouldaccompanyLPGsubsidyreformwitharobustpublicendorsementplantoproactivelyengageotherpoliticalandinfluentialgroups,aswellascommunicateobjectives,benefits,andpotentialcompensatorymeasures.

Indonesiashouldmakeuseofthemomentumofthelowoilprices,astheycanactasabuffertothepotentialeconomicshocksandhelplimitoppositiontoreform.

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TableofContents

ExecutiveSummary iii

AbbreviationsandAcronyms vii

1.0Introduction 1

2.0LPGSubsidiesinIndonesia 3

2.1TheReasonforLPGSubsidies 3

2.2TheProblemofLPGSubsidies 3

2.3PastAttemptstoReduceSpendingonLPGSubsidies 5

3.0CurrentLPGSubsidyReformPlans 6

3.1TargetingLPGSubsidies 6

3.2ThePlanProposedbyTNP2K 6

3.3TheBenefitofTargetingLPGSubsidies 7

4.0ReformofLPGSubsidiesandImpactonClimateChange 8

4.1CostComparisonofCookingWithSubsidizedLPG,Non-SubsidizedLPG,and

Electricity 8

4.2GreenhouseGasEmissionsofCookingwithLPGandElectricity 8

4.3AdditionalCostsAssociatedWiththeSwitchtoElectricInductionStoves 9

4.4PromotionofCookingWithElectricitybytheIndonesianGovernmentandPLN 10

5.0InternationalCaseStudies 11

5.1IndiaCaseStudy:IncreasingfueltaxesasaresponsetotheCOVID-19crisis 11

5.1.1TheImpactoftheCOVID-19CrisisonIndia’sPublicBudget 11

5.1.2TheCompositionofIndianFuelPrices 11

5.1.3IncreasingFuelTaxestoSecureFiscalSpending 12

5.1.4TheEffectoftheFuelTaxIncreasesonRetailPrices 12

5.1.5TheImpactofFuelTaxIncreasesonSociety 14

5.1.6Lessons 15

5.2IndiaCaseStudy:NewsocialprotectionschemesforLPGasaresponsetothe

COVID-19crisis 16

5.2.1TheImpactoftheCOVID-19CrisisonPoorandOtherVulnerablePeopleinIndia 16

5.2.2India’sSocialProtectionProgramsforUsingLPG 16

5.2.3NewLPGSocialProtectionMeasureasaResponsetoCOVID-19 17

5.2.4FinancingtheNewLPGSocialProtectionMeasure 17

5.2.5Lessons 18

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5.3MexicoCaseStudy:Expandingexistingsocialprotectionprogramsasaresponseto

the2008/09globaleconomiccrisis 19

5.3.1TheImpactofthe2008/09GlobalEconomicCrisisonMexico’sEconomy 19

5.3.2FederalCashTransfer(Oportunidades)asaMeansofSocialProtection 19

5.3.3ExtendingtheFederalCash-TransferProgramWithanEnergyComponentto

ProtectthePoorFromHighOilPrices 20

5.3.4TheImpactoftheEnergyComponent 20

5.3.5Lessons 21

6.0Conclusion 22

References 24

ListofFigures

Figure1.Indonesia’sGDPgrowth,deficit,andspendingonLPGsubsidiesbetween

2016and2021 2

Figure2.VolumeofsubsidizedLPGandshareofdomesticproductionandimports

intotalLPGusedbetween2009and2021 4

Figure3.Distributionofthebenefitsofsubsidiesfor3-kgLPG 5

Figure4.EvolutionofthecomponentsofgasolinepricesinDelhibetweenJanuaryand

September2020 13

Figure5.EvolutionofthecomponentsofdieselpricesinDelhibetweenJanuaryand

September2020 14

Figure6.India’sspendingonDBT-Landtheevolutionofthecrudeoilpriceinthe

IndiaBasketbetween2015and2021 18

Figure7.Changesinpovertyandenergypricesbetween2006and2010 21

ListofTables

Table1.Additionalcostsaspartofswitchingtoelectricinductionstoves 9

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AbbreviationsandAcronyms

DBT DirectBenefitTransfer

GHG greenhousegas

GST GoodsandServicesTax

LPG liquefiedpetroleumgas

MEMR MinistryofEnergyandMineralResources

OMC oilmarketingcompanies

PLN PerusahaanListrikNegara

PMUY PradhanMantriUjjwalaYojana

RIC RoadandInfrastructureCess

SAED SpecialAdditionalExciseDuty

TNP2K NationalTeamfortheAccelerationofPovertyReduction

VAT value-addedtax

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1.0Introduction

Indonesia’seconomywashithardin2020duetotheCOVID-19pandemic.InMarch,thegovernmentadoptedvariousmeasurestocontainthediseaseafterthefirstcaseshadbeenconfirmed(InternationalMonetaryFund,2020).Thisessentiallysloweddownmanyeconomicactivitiessincethesemeasuresincludedtravelbans,schoolclosings,andtherestrictionofpublicevents.Othercountriesshutdowntheireconomiesaswell,and,consequently,globaldemandforIndonesianproducts,particularlyenergyproducts,declined.Forinstance,Indonesiancoalexportswereabout32%lowerinApril2020and41%lowerinMay2020comparedtooneyearbefore(MinistryofEnergyandMineralResources[MEMR],2020e).

Boththelowerdomesticconsumptionandthedecreaseinexportshadnegativeimplicationsonthecountry’sGDPgrowth,whichdroppedto-2,07%in2020,downfromastablegrowthofabout5%between2016and2019(MinistryofFinance,2020;Nuryanto,2021).Inaddition,Indonesia’sbudgetbalancehasbeenseverelyimpactedbylowertaxcollectionandtheneedforincreasedspending.Accordingtoanofficialofthefinanceministry,taxrevenueswereexpectedtocontractbyalmost20%in2020whilethegovernmentspentatleastUSD6.78billion(untilFebruary2021)tosupportitsenergysector,mostlytosupportfossilfuels(EnergyPolicyTracker,2020;Nuryanto,2021).Thiscontributedtothebudgetdeficitwideningto-6.34%ofGDPin2020afterithadbeenaround-2%between2016and2019(MinistryofFinance,2020;Nuryanto,2021).Asaresult,theratingagencyStandardandPoor’sloweredthestableoutlookofIndonesia’sBBB-creditratingfromstabletoanegativeoutlookinApril2020(Haroon,2020).

EnergysubsidieshavebecomeasignificantstrainonIndonesia’sbudget.In2019,spendingonenergysubsidiesreachedIDR136.9trillion(USD9.7billion)andmadeup6%ofthetotalstateexpenditures(MinistryofFinance,2020).Inparticular,LPGsubsidies,whichrepresentedabout40%ofthetotalcostoftotalenergysubsidiesin2019ataboutIDR

54trillion,haveseenanincreasingtrendinrecentyears(Figure1).Thismadeliquefiedpetroleumgas(LPG)subsidiesthesinglelargestcomponentofallenergysubsidiesaheadofthosespentonelectricityandfuel.EventhoughdemandforsubsidizedLPGincreasedin2020(e.g.,by11%inApril[Hartomo,2020])asaresultofincreasinglystayingathomeduringthelockdown,theexpectedgovernmentspendingonLPGsubsidiesdroppedtoIDR23.5trillion(USD1.6billion)in2020duetolowoilpricesandachangeintheexchangerate.However,theprojectionfor2021ofIDR37.8trillion(USD2.6billion)showsthatthesecostswillrapidlygobackup,inlinewithrecoveringoilprices.Inadditiontothenegativeimpactonthepublicbudget,thedistributionofLPGsubsidiesisalsoratherinefficient,asthereisnotargetingmechanism.

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Figure1.Indonesia’sGDPgrowth,deficit,andspendingonLPGsubsidiesbetween2016and2021

6

60

GDPgrowthandbudgetbalance(surplus-deficit/GDP)(%)

LPGsubsidies(IDRtrillion)

4

10

50

2

40

0

30

-2

20

-4

-6

Real

-8

0

2016

2017

2018

2019

2020

2021

(predictions)

RealGDPgrowth(leftaxis)

Budgetbalance(leftaxis)

LPGsubsidy(rightaxis)

Remarks:Valuesfor2021arepredictions.

Source:MinistryofFinance,2020;NationalTeamfortheAccelerationofPovertyReduction(TNP2K),personalcommunication,2020.

Eventhoughreformingenergysubsidiescanbeasensitivetopic,Indonesiahashadapositiveexperienceinthepast.Supportedbylowinternationaloilprices,theIndonesiangovernmentalmostcompletelyremovedgasolinesubsidiesandfixeddieselsubsidiesperlitrein2014.ThisfreedupIDR211trillion(USD15.6billion),whichwasredirectedasadditionalspendingforregionaltransfersandvillages,specialprogramstoboostgrowthandreducepoverty,andcapitalinjectionsinstate-ownedenterprises,largelyforinvestmentininfrastructure(Pradiptyoetal.,2016).

ReformingLPGsubsidiescouldbuildonthissuccessandhelpcreatefurtherfiscalspaceforsupportingotherpriorities,includinghealthandeconomicrecovery.Consideringthatthenumberofpeopleclassifiedaspoorwentupby1.63milliontomorethan26millionbetweenSeptember2019andMarch2020,targetingLPGsubsidieswouldresultinsignificantsavings,whilethoseinneedwillcontinuetobeprotected(CentralBureauofStatistics,2020).

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2.0LPGSubsidiesinIndonesia

2.1TheReasonforLPGSubsidies

InIndonesia,LPGsubsidieswereintroducedin2008aspartofthegovernment’sConversionProgramfromKerosenetoLPG(Toftetal.,2016).Themainmotivationforimplementingthisprogramwasreducingsubsidiesforkerosene,whichgrewmorethanfourfoldbetween2001and2008,whileswitchingtoacleanerfuelthatresultsinlowerlevelsofindoorairpollution(Budya&YasirArofat,2011;GovernmentofIndonesia,2009).BecausethepriceofLPG(peroutputofenergy)wasloweranditsdistributionfairlyeasy,theIndonesiangovernmentencouragedsubstitutingkerosenewiththisalternativethroughtheprovisionoffreeLPGstarterpackagesandsubsidizedratesforrefillingLPG(Budya&YasirArofat,2011).Essentially,thisprogramaimedtoreducetheconsumptionofkerosenewhileprotectingconsumersfromeconomicshocks,aspreviousattemptstoreduceconsumptionthroughincreasingthepriceofkerosenehadresultedinseriousriots(Beaton&Lontoh,2010).

Overall,theprogramwassuccessfulintermsofmovingawayfromkerosene,asconsumptionwentdownbymorethan93%between2008and2016(OrganisationforEconomicCo-operationandDevelopment,2019).AccordingtodatafromtheNationalSocioeconomicSurvey(SUSENAS),consumptionofLPGgrewsignificantly,anditwasthemaincookingfuelfor69%ofthehouseholdsin2015,upfrom11%in2007(Kusumawardhanietal.,2017).

2.2TheProblemofLPGSubsidies

Overtheyears,spendingonLPGsubsidiesbecameincreasinglycostlyduetothisgrowingdemand.LPGissoldinthreedifferentcylindersinIndonesia:3kg,5.5kg,and12kg(TNP2K,personalcommunication,2020).Whilethepriceofthe3-kgcylindersissubsidizedandhasremainedconstantsince2008,LPGsoldin5.5-kgand12-kgcylindersisnotsubsidized,andtheirpricesareconstantlyadjustedovertimetofollowinternationalmarketprices(TNP2K,personalcommunication,2020).Thisledtoanincreasingpricedisparitybetweensubsidizedandnon-subsidizedLPG,whichencouragedmoreconsumerstopurchasesubsidized3-kgLPGcylinders.EventhoughtheIndonesianLawonEnergy(2007)demandsthatenergysubsidiesareprovidedtopoorandvulnerablegroupstoincreasetheiraccesstoenergy,thesubsidized3-kgLPGcylindersarefreelyavailableandnotlimitedtoonlythesegroupsinanywaytodate.Asaresult,evenlargemajoritiesamonghouseholdsthatbelongtotheoneswiththehighestincomesarepurchasingsubsidized3-kgLPGcylinders(TNP2K,personalcommunication,2020).

AsshowninFigure2,thevolumeofsubsidizedLPGsoldhascontinuouslyrisensincethesubsidy’sinceptionin2009,andLPGsubsidiestranslatedintopublicspendingofIDR54trillion(USD3.8billion)in2019(AuditBoardoftheRepublicofIndonesia,2020).BeforetheCOVID-19pandemic(andthesubsequentchangesintheoilpriceandexchangerate),theconsumptionofsubsidizedLPGwasprojectedtofurtherincreaseto10billionkgin2023,

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whichwouldhavetranslatedintogovernmentspendingofIDR89trillion1(USD6.1billion)undertheassumptionthatpriceswouldremainconstant(TNP2K,personalcommunication,2020).BecauseLPGdemandisincreasinglymetthroughimports(Figure2)—about75%in2019—subsidizingtheconsumptionofLPGalsoincreasinglycontributestothedeficitofIndonesia’senergytradebalanceandexposestheStateBudgettoadditionalrisks(MEMR,2020a,2020c).

Figure2.VolumeofsubsidizedLPGandshareofdomesticproductionandimportsintotalLPGusedbetween2009and2021

Tonnes

10,000,000

9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

20092010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

(predictions)

Production

Import

Total

SubsidizedLPG(realizationofAPBN)

Remarks:Valuesfor2020and2021arepredictions.

Sources:MEMR,2020a,2020c.

Finally,LPGsubsidiesareregressiveandthereforedonothelpinreducinginequality.AccordingtoastudyonthedistributionofLPGsubsidies(Kusumawardhanietal.,2017),onlyabout39%oftheusersofthesubsidized3-kgLPGcylindersbelongtothe40%ofthehouseholdswiththelowestincomelevels,eventhoughtheseshouldbetheprimaryaudienceaccordingtoIndonesianlaw.Inaddition,wealthierhouseholdsconsumemoreLPGonaverageandthereforebenefitfromhighertotalsubsidiesperhousehold(Figure3).Inaddition,inruralareaswheremanypoorhouseholdsarelocated,accesstotheofficiallyprizedsubsidizedLPGcylindersislimited,asinformaldealersandadditionaltransportcostsneedtobepaid.Asaconsequence,only30%ofthetotalLPGsubsidieseventuallygoestothepeopleinneed(40%ofthehouseholdswiththelowestincomelevels);thewealthierhouseholds,whodonotneedsuchsubsidies,claimthemost,asshowninFigure3(Kusumawardhanietal.,2017).

1Undertheassumptionthatpriceswouldremainconstant.

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Figure3.Distributionofthebenefitsofsubsidiesfor3-kgLPG2

120,000

100,000

80,000

IDR

60,000

40,000

20,000

0

1 2 3 4 5

IncomeQuintile

35

30

25

20

15

10

5

0

%

Averagesubsidyperhousehold(leftaxis)

Source:Kusumawardhanietal.,2017.

%oftotalLPGsubsidybenefits(rightaxis)

2.3PastAttemptstoReduceSpendingonLPGSubsidies

Inthepast,Indonesia’sstate-ownedoilandnaturalgascompany,PTPertamina,hastriedseveralmeasurestoencouragewealthierconsumerstoconsumenon-subsidizedLPG.Thisincludedsellingnon-subsidizedLPGin5.5-kgcylindersbeginningin2015and3-kgcylindersin2017,aswellasprovidingspecialrebates(Maulana,2018;Prakoso,2015;Prasongko,

2017).However,theseeffortswerenoteffectivebecausetheydidnotaddressthefundamentalproblems—thepricediscrepancybetweensubsidizedandnon-subsidizedLPGwithoutlimitingaccesstotheformer—underpinningthemismatchedsubsidy.Thegovernmentisalsopilotingthegasificationofcoal(CoalDME)andexpandingtheLNGdistributionnetworkthroughtheCityGasprogram,butthesealternativesarefarfrombeingscaledandarethusratherlong-termsolutions(MEMR,2020d).ThegovernmenthasshowninterestinlimitingaccesstosubsidizedLPGtocertaingroupsonlyinthelastfewyears,butregulationshavenotyetbeenenacted.Mostrecently,thegovernmentwasplanningtoimplementaclosedsystemwherebeneficiarieswouldreceivealimitednumberofsubsidizedLPGcylindersbythemiddleof2020,butthiswaspostponedbecauseoftheCOVID-19crisis(Philemon,2020).

2Thetotalnumberofhouseholdsinincomequantile5isverylow,andthereforeitsshareoftotalLPGsubsidybenefitsaresmallerthanforincomequantiles3and4;whereastheaveragesubsidyperhouseholdishighestforhouseholdsinincomequantile5.

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3.0CurrentLPGSubsidyReformPlans

3.1TargetingLPGSubsidies

In2019,theFiscalPolicyAgencyoftheMinistryofFinanceandPROSPERAassessedtheeffectivenessofthecurrentsubsidysystemandproposedremovingthecurrentpricesubsidyandprotectingvulnerablegroupswithadirecttransferofcashassistance.Inaddition,theirstudyhighlightedtheneedforthefollowingelements:

Assistancethatissufficienttocompensateforthedecreaseinpurchasingpower.

Determinationofthetargetrecipientsofthecashtransferthatisbasedonavaliddatacollectionprocess.

Testingthefunctioningoffacilitiesandinfrastructurethatsupportthepolicyshift.

SeveralschemeshadbeenproposedforimplementingthisdirecttransfersystemfortheLPGsubsidy.AccordingtotheMEMR,oneoptiontestedinseveralplacesusedacardwithabarcodethatisconnecteddirectlytothebeneficiarygroup’sbankaccount(Simatupang,2020).Whenpurchasing3-kgLPGcylinders,thebarcodeisinstantlyrecorded,andthesubsidyistransferreddirectlyintothecardholder’sbankaccount.

3.2ThePlanProposedbyTNP2K

Meanwhile,TNP2Kdevelopedaschemewhereeligibilityisverifiedthroughafacialbiometricmechanism(TNP2K,personalcommunication,2020).Accordingtothissystem,aregisteredbeneficiarycangotoanagentorshop,wherehis/herbiometricscanbeverifiedwiththeLinkAjasmartphoneapplication—anIndonesianinterbanknetwork—bytakingapictureofthebeneficiary.EnteringtheCustomsIdentificationNumberopensthepersonaldataandcurrentassistancebalance,and,ifthisbalanceissufficient,thepaymentcanbetransactedandtheemptyLPGcylinderreplaced.

Tolimitthesubsidiestothefamiliesthatmakeupthelowest40%oftheIndonesianpopulationintermsofsocio-economicstatus,TNP2Kusedgovernmentdatausedforelectricitysubsidiestoidentifyaround30millioneligiblefamilies—approximately20millionhouseholdsfewerthanthosethatarecurrentlybenefitingfromthesubsidized3-kgLPGcylinder(Citra,2020;TNP2K,personalcommunication,2020).Eacheligiblehouseholdwouldreceivetransfersworththree3-kgLPGcylinderspermonth,eachmicrobusinesswouldreceivetheequivalentofnine,andbothfamilyfishersandfarmerswouldreceivetheequivalentof12,basedonestimatesofminimalbasicconsumptionneeds(TNP2K,personalcommunication,2020).

Totestafaceorfingerprintbiometricsystemaswellasane-vouchertechnology,TNP2KconductedthefirstpilotfromDecember2018toMay2019insevenregionsthatinvolvedmorethan14,000households(Wicaksono,2019).Theresultsofthatpilotshowedthatthetransactionprocesscouldbecarriedoutsmoothlyandquickly,butsomeLPGsellerswerenotreadytoservethetransactionprocessandrequiredadditionaltraining.Whiletheface

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verificationprocessranwithoutproblems,thefingerprintverificationmethodtooklonger,andthevouchercodeverificationmethodwasslightlyconstrained,assomebeneficiariesforgottheirPINnumber,registeredtheirphonenumbersincorrectly,orhadissueswiththecellphonesignal.Despitepotentialissueswithregardstothescalabilityofthetechnologyandusabilityinremoteareasifsupportinginfrastructurewerelacking,TNP2Kfavourstheuseoffacialbiometrictechnology,whichalsosavescostssuchasfeesforprintinganddistribution(TNP2K,personalcommunication,2020).Basedonthefindingsofthefirstpilot,thetechnologywasperfectedthroughasecondpilotinthreedistrictsbetweenSeptemberandNovember2019(Citra,2020).

3.3TheBenefitofTargetingLPGSubsidies

Intheir2019study,theFiscalPolicyAgencyoftheMinistryofFinanceandPROSPERAalsoanalyzedtheimpactsofchangingthecurrent3-kgLPGcylindersubsidyschemeandfoundthatremovingLPGsubsidieswithoutanycompensationwouldincreaseinflationby1.32percentagepoints,whichwouldincreasenationalpovertyby0.47%to1