Client: Fiscal Policy Agency, Ministry of Finance

Svara Institute (formerly Presisi Indonesia) in collaboration with the Fiscal Policy Agency (Badan Kebijakan Fiskal/BKF) - Ministry of Finance conducted a study on two government policy plans, namely biodiesel subsidies and the imposition of excise on motorcycles. 

The first study—biodiesel subsidy analysis—aims to identify the Government's fiscal readiness to provide biodiesel subsidies when the price is higher than the price of traditional diesel fuel. It uses a statistical forecast method known as Box-Jenkins’ Autoregressive Integrated Moving Average (ARIMA). The result of study recommends a stopping price—whichis the highest and the lowest diesel price—as a signalling price for the Government to make efforts to increase biodiesel subsidy resources.

The second study—i.e., motorcycle excise analysis—is aimed to estimate the amount of excise on motorbikes that can control the number of new motorcycles and its impact on emissions in Indonesia. The methods used were Ordinnary Least Square (OLS) and Vector Autoregressive (VAR). The study found that the demand for motorbikes in Indonesia is inelastic, implying that the decrease in demand for motorbikes does not necessarily occur due to excise levies on the selling price. There are other factors beyond this study model that can influence people's decisions to buy a new motorcycle, for example: income. Therefore, motorcycle excise tax policies must be followed by improving access, quantity, quality, and affordability of public transportation. In addition, it is also necessary to provide incentives for the purchase and use of environmentally friendly vehicles, such as electric motors, and development that supports environmentally friendly infrastructure.

For further information regarding this study, please contact info@svara-institute.com.