One crisis, two similar countries, very different responses. The global energy crisis has made one thing clear: countries that look similar on paper do not always respond the same way in times of crisis.
Consider the cases of the Philippines and Indonesia. Both are frequently compared as neighboring ASEAN states with middle-power ambitions, developing economies, and energy importers, but when oil prices surged, their responses could not have been more different. The Philippines moved quickly to declare a state of emergency, the first in the world to do so, while Indonesia projected a calmer stance that could even pass as confidence. The divergence between the two highlights how domestic politics, institutional capacity, and policy priorities shape outcomes under duress. More importantly, beneath the responses of the governments of the Philippines and Indonesia are two distinct systems of public aid: one is highly reactive, mainly anchored in the provision of “ayuda,” while the other is embedded in a long-standing energy subsidy.
Part of the story is simply structural. The Philippines is extremely dependent on imported oil, of which 98% comes from the Gulf area. It now operates just one refinery in Bataan, leaving the country vulnerable whenever global supply is disrupted. Indonesia, on the other hand, also imports oil but not to the same extent, and it operates six state-run refineries under Pertamina. It does not make it immune to shocks, but it provides the Indonesian government with sufficient room to maneuver when prices spike.
Two Models of Aid
These structural differences are evident in how each country delivers social assistance to its citizens. In the Philippines, the response is through cash dole-outs locally known as ayuda. Financial assistance is provided after the damage has been felt: fuel prices rise, and the public, especially the underprivileged, struggle. One-time payouts follow. While these payments are immediate and noticeable, they often lead to public frustration regarding their adequacy, timeliness, and sustainability. Indonesia, on the other hand, takes a different approach. Instead of allowing prices to rise and then compensating the people, the government intervenes early with fuel subsidies that have been in place since the 1970s. The government regards energy subsidies as a “public service obligation” and thus absorbs the shock before it reaches consumers. So, even as global oil prices climb, retail fuel prices stay relatively stable. For ordinary Indonesians, the crisis feels less abrupt.
Indonesia’s fuel subsidy, however, is not without its critics. Many argue that subsidies end up helping wealthier households more than those who actually need them, making them an unfair and less effective welfare tool. In fact, data shows that the top 20% of households receive over 46% of the benefits. Heavy reliance on such measures risks widening fiscal imbalances, with deficits creeping beyond the 3 per cent threshold, a pattern already evident in Southeast Asian economies like Malaysia and Thailand. Some also contend that subsidies distort the market, often resulting in an overburden on the government budget. There are also concerns that the program slows the shift to renewable energy, potentially worsening environmental damage over time.
The Politics Behind the Aid
But aid is never just economic; it is political. In the Philippines, ayuda has a long history and, over time, has become entangled with patronage politics. Assistance is largely tied to politicians and local networks, which makes it powerful but also limiting in so many aspects. It is, thus, unsurprising that ayuda has been criticised for supposedly failing the poor. It solves immediate needs without necessarily fixing deeper problems. Despite the extent to which it has been politicised, calls have emerged for the targeted provision of ayuda to the poorest households amid the fuel crisis. Proponents argue that blanket excise tax suspensions are poorly targeted measures: rather than alleviating the burden of high fuel prices on disadvantaged communities, such responses would disproportionately benefit better-off households. Although these arguments are well-intentioned, they overlook a central issue: the long-standing inefficiency and corruption of the Philippine government. Expecting the government to suddenly become effective at implementing targeted assistance can therefore be risky and illogical.
In Indonesia, fuel subsidies play a different role. They act more like a broad, state-managed promise that the government will keep energy affordable. Its economic ministry recently announced that Indonesia can withstand the impact of war-fueled oil price hikes for up to 10 months without cutting fuel subsidies. In many ways, the state budget acts as a shock absorber. This system goes back decades and is tied to strong state control over key sectors. Its underlying premise is that energy resources should serve the public; accordingly, subsidies function as a price-stabilisation tool, particularly in an economy where inflation quickly erodes household purchasing power. Still, subsidies are expensive, and keeping them in place can be as much about political popularity as economic logic.
Beyond short-term fixes
In the end, the stark contrast between ayuda and fuel subsidies highlights key governance issues. The Philippines helps people cope in the aftermath of a crisis, while Indonesia proactively aims to soften the blow before it strikes. Each approach has its own strengths and limits. Neither, however, fully solves the bigger problem: energy insecurity.
Mounting economic pressures in the Philippines have pushed the return of community pantries to help public utility drivers affected by oil price hikes. Such initiatives, which began and proliferated during the pandemic, reflect the Filipino value of “bayanihan,” or collective action and solidarity amid struggles. More importantly, the resurgence of pantries demonstrates how volunteer-driven efforts fill the gap left by the government. Against this backdrop, it is hoped that the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) – the Philippines’ “whole-of-government” effort to mitigate the global energy crisis – will produce positive outcomes. The UPLIFT committee’s duties include formulating “longer-term demand-side” solutions to reduce reliance on petroleum products, including investments in mass transportation systems and active transportation infrastructure.
In Indonesia, the government is seeking to accelerate the country’s transition to green energy. It has signed agreements with international partners to develop renewable and fossil fuel projects to strengthen the country’s energy security as a hedge against the repercussions of rising geopolitical tensions. Still, questions about the actual cleanliness and sustainability of “green” initiatives attract scrutiny. It also does not help that Prabowo has encountered significant challenges, mainly the nationwide protests against his administration, since assuming office in October 2024. Amid the fuel crisis, Prabowo continues to take overseas trips, even as the public is urged to reduce fuel consumption.
As global shocks become more frequent, the question is no longer just how governments deliver aid, but whether they can move beyond stopgap measures toward more effective and long-term strategies in just energy transition.
Dr Lermie Shayne S. Garcia is Assistant Professor in the Department of History at Ateneo de Manila University. Her research examines the intersections of leadership and democratisation in the Philippines and Indonesia, as well as the evolving landscape of Southeast Asian Studies. She holds a PhD in Public and International Affairs from City University of Hong Kong.
Kevin Nielsen M. Agojo is a PhD Candidate in the Department of Public and International Affairs at the City University of Hong Kong and an Assistant Professorial Lecturer in the Department of Political Science and Development Studies at De La Salle University. His research interests include policing, democratization, electoral politics, and human rights.
This article is published under a Creative Commons License and may be republished with attribution.
