Fuel prices leap 126.6 percent<\/p>\n
Rendi A. Witular and Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
The government rang in October with a very steep fuel price hike
\n-- by an average of 126.6 percent -- amid a relatively minor
\nclash, sporadic protests and long lines at gas stations.<\/p>\n
Coordinating Minister for the Economy Aburizal Bakrie
\nannounced that the price of premium (subsidized) gasoline is now
\nRp 4,500 (44 U.S. cents) per liter, from Rp 2,400; diesel fuel is
\nnow Rp 4,300 from Rp 2,100 and kerosene, mostly used for cooking
\nin low-income households, nearly tripling to Rp 2,000, from Rp
\n700.<\/p>\n
The increase was far higher than expected as government
\nofficials previously estimated that the prices would go by
\nbetween 50 percent and 80 percent.<\/p>\n
Kerosene, which most directly affects the poor, was the
\nhighest increase.<\/p>\n
Aburizal had to rush to the Ministry of Finance's auditorium
\nto make the announcement, arriving shortly before midnight late
\non Friday after a prolonged Cabinet meeting at the Presidential
\nPalace.<\/p>\n
Apart from the fuel prices, the government also issued five
\nincentive packages, which include discounts for certain products,
\ntrade reform regulations, public transportation reform, an
\nincrease in the minimum price of unhusked rice paid to farmers
\nand a direct subsidy for the poor.<\/p>\n
The unpopular decision came after President Susilo Bambang
\nYudhoyono won approval from the House of Representatives, in a
\n273-to-83 vote, to drastically cut the fuel subsidy expenditure,
\nthereby stopping the bleeding from this year's budget.<\/p>\n
As Indonesia has become a net oil importer amid rising fuel
\nconsumption, declining oil production and soaring global oil
\nprices recently hit US$70 a barrel, the fuel subsidies would have
\nballooned well over Rp 110 trillion to keep the fuel prices at
\ntheir current levels.<\/p>\n
\"It is not an easy choice. I understand that this is a bitter
\npill but I have to do it to save the country's economy and the
\ncountry's future,\" President Susilo Bambang Yudhoyono said
\nearlier on Friday while inaugurating a new Astra Honda Motor
\nmanufacturing plant in Bekasi.<\/p>\n
Susilo has also won support from clerics, including the ever-
\npopular Abdullah Gymnastiar, who called on the public to \"support
\nthe government's policy because this is not just happening to
\nIndonesia, but also other countries.\"<\/p>\n
Vice President Jusuf Kalla had previously defended the
\ngovernment's decision to increase fuel prices ahead of Ramadhan,
\nsaying the people \"would consume less kerosene in the month as
\nthey only cook twice\".<\/p>\n
In his speech, Susilo ensured citizens that the government
\nwould mitigate the inflationary knock-on effects of the hike by
\ngiving money and other benefits directly to the poor.<\/p>\n
The government earlier this week transferred Rp 1.7 trillion
\nof an allocated Rp 4.65 trillion, to the Ministry of Social
\nServices, which later transferred the funds to government-
\nappointed PT Pos Indonesia and Bank Rakyat Indonesia branches.<\/p>\n
Each of the estimated 15.6 million low-income households
\neligible assistance will get Rp 300,000 each quarter over the
\nnext year. Eligible recipients are those living on or below the
\npoverty line with an individual monthly income of less than Rp
\n175,000.<\/p>\n
Aburizal said when meeting with student representatives hours
\nbefore announcing the hike that the government would review at
\nthe end of 2006 its direct, cash-transfer subsidy scheme for low-
\nincome families affected by the fuel price hike, hinting at the
\npossibility of discontinuing the scheme in the future.<\/p>\n
He said it would always be better for the government to
\nprovide \"the hook to catch fish\" in the form of jobs, rather than
\nmerely \"the fish\" in handouts.<\/p>\n
\"But for the time being, we will provide the fish,\" he said.<\/p>\n
This fuel price raise was the second this year, also the
\nsecond for Susilo since he took over the presidency last October,
\nafter the March 1 increase by an average of 29 percent.<\/p>\n
Also in March, the government made available Rp 17 trillion
\ndirected at easing the plight of the poor, and supposedly used
\nthat money to improve education, health services and rural
\ninfrastructure. With this new package of aid, the total bill for
\nthe year in extra benefits for the poor will reach Rp 30
\ntrillion.<\/p>\n
Elsewhere, Minister of Trade Mari E. Pangestu said the
\ngovernment would continue to ensure that staple foods throughout
\nthe country would remain available and remain at affordable
\nprices. Prices of rice, sugar and cooking oil had already begun
\ncreeping up even before the actual increase.<\/p>",
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