JAKARTA, Indonesia — It’s Tuesday morning, and about three dozen vehicles wait for the fuel truck at a service station on the island of Belitung, Indonesia. Soon, a steady stream of cars will buy all the subsidized diesel, and many of the drivers will then siphon their ration into jerry cans to sell at a profit.
The daily ritual is one step in a series of scams that range from car owners earning a few hundred dollars to organized crime syndicates making millions out of Indonesia’s lopsided fuel distribution system.
The pervasive fraud takes advantage of subsidies that cost the government more than $20 billion a year and lures hundreds of thousands of Indonesians into breaking the law.
“With the discrepancy between the price of subsidized fuel and market value, smuggling, hoarding and deliberate scarcity are normal,” said Achmad Sukarsono, an associate fellow at the Habibie Center, a research institute in Jakarta.
“It can be a lucrative business involving soldiers, policemen and violent incidents.”
President-elect Joko Widodo is the latest leader to promise to curtail the subsidies and their inherent corruption, a strategy that helped end the three-decade rule of dictator Suharto and has eluded four presidents since.
The issue is so entrenched in the country’s economy that it touches almost every aspect of life across the 17,000-island archipelago, from fishermen selling their marine diesel to pay for cigarettes to wealthy drivers in the capital unable to fill their SUVs as gas stations run dry.
Basuri Purnama, head of East Belitung Regency, said the racketeering and smuggling are so profitable that it draws people away from getting legal jobs.
“Why work?” he said. Anyone can make 200,000 rupiah a day smuggling fuel. “Every day, just do that and then chill out in the coffee house.”
Police arrested four people on the island of Batam and one in Jakarta last month for alleged fuel smuggling involving a local government official and the armed forces, said Ronny Sompie, a spokesman for the national police force.
“After we uncovered the case, there were linkages to officers” in the navy, Sompie said.
The ongoing investigation began after the government’s financial crimes unit alerted police to a civil servant having deposited 1.3 trillion rupiah-worth of Singapore dollars into a savings account, according to Agus Santoso, head deputy of the unit.
Navy spokesman Manahan Simorangkir denied that naval officers were involved in smuggling.
