March 07, 2005<\/p>\n
Managing fuel prices<\/p>\n
About 30 members of the House of Representatives have asked
\nthe legislature to exercise its right of inquiry into the
\ngovernment decision to raise on March 1 fuel prices by an average
\nof 29 percent.<\/p>\n
The wave of protest demonstrations against the fuel policy,
\nhave continued in several cities, though they seem to be
\ndwindling in intensity. Some non-governmental organizations have
\nfiled a class action lawsuit against the government at the
\nCentral Jakarta District Court.<\/p>\n
All these actions were predicted, given the inadequate
\npreparations by the government to build up a national political
\nconsensus on the painful price hikes. But the protests, heated
\ndebates and outright opposition to the fuel price hike also
\nsimply demonstrate the work of democracy.<\/p>\n
This is what democracy is all about.<\/p>\n
The government cannot simply launch a policy and sit back and
\nrelax, hoping that all things will run normally and problems will
\ntake care of themselves. The government should instead work hard
\nto \"sell\" its policy, reaching out to the people, and, in the
\nprocess, listening to different views before finally deciding on
\nthe best option or taking corrective measures, if necessary.<\/p>\n
As long as the street demonstrations are orderly, and the
\ngovernment is able to maintain adequate supplies and smooth
\ndistribution of basic commodities, the panic market reaction, as
\nreflected in the abnormally steep rise in the prices of several
\nfood commodities and transportation fares, should recede soon.<\/p>\n
The market will return to a new equilibrium within the next
\nfew weeks after it fully absorbs the impact of the higher fuel
\nprices on the various sectors of the economy. Certainly, the
\nprices of most goods and services will rise. It is totally wrong
\nto deceive the public into believing otherwise. But the rate of
\nthe price rises would be proportional to the role of fuel in
\ntheir respective production costs.<\/p>\n
Even though most points of arguments in favor or against the
\nfuel price policy should have exhaustively been treated a few
\nweeks before the March 1 measure, the current debates are
\nnonetheless healthy as they will enlighten the public of the
\nwhole perspective of our overall energy policy.<\/p>\n
Take, for example, the bone of contention among House members
\nto have the fuel production costs of the State Oil Company
\nPertamina, which still holds a monopoly in fuel, independently
\naudited. This point simply makes sense, especially because of the
\nlingering public perception that virtually all state companies
\nhave yet to establish good corporate governance practices.<\/p>\n
The ruling by the Business Competition Supervisory Commission
\nthat was disclosed on Thursday may strengthen the House demand
\nand embolden public pressures for an independent audit of
\nPertamina's production costs.<\/p>\n
The Commission ruled after more than eight months of
\nexamination and investigations that Pertamina directors and
\ncommissioners were guilty of colluding with its financial
\nadvisers and bidders for the sales of its two very large crude
\ncarriers in mid-2004, thereby costing the state up to US$50
\nmillion in losses.<\/p>\n
It is nevertheless a great comfort to observe President Susilo
\nBambang Yudhoyono personally leading the communication campaign
\nto ensure a smooth, orderly phasing in of the new fuel price
\npolicy.<\/p>\n
His impromptu visit to the West Java regency of Rengas
\nDengklot, on Wednesday morning, without the trappings of
\nelaborate official protocol, to monitor the impact of his policy
\non the people is the right kind of action needed to keep the
\ngovernment apprised of the public's and market's reaction to the
\nunpopular, yet sorely needed, reform move.<\/p>\n
As Susilo himself is a good communicator, he should continue
\nreaching out to the people, talking honestly in simple layman's
\nterms to them and appealing for their understanding about the
\nsacrifices they have to put up with for the long-term good of the
\neconomy.<\/p>\n
Susilo and his Cabinet ministers still need to launch a
\nnationwide campaign to explain the big picture of our fuel
\nproblems: How artificially low prices would eventually cause a
\nmassive disruption in the supply of energy, hinder the
\ndevelopment of alternative energy resources, which are quite
\nabundant in the country, and increase the state budget deficit.
\nThe deficit would become unmanageable and lead to spiraling
\ninflation. They need to explain how subsidized fuels have so far
\nbeen enjoyed mostly by the well-to-do families; how the wide
\ndifferences between domestic and international fuel prices have
\nbeen exploited by profiteers -- smuggling cheap fuels overseas.<\/p>\n
The phasing out of fuel subsidies is a good moment to educate
\nconsumers about the economics of commercial energy, to make them
\nrealize that, sooner or later, in one way or another, they will
\nhave to pay for that fuel -- based on economic realities -- or
\nsuffer supply disruptions.<\/p>\n
__________<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/march-07-2005-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }