Next government will raise fuel prices next year<\/p>\n
Zakki P. Hakim, The Jakarta Post\/Jakarta<\/p>\n
The two presidential candidates and their running mates were
\nforced to address what may be the toughest economic challenge
\nnext year -- raising fuel prices at home -- when they met a group
\nof economists during a televised dialogue late on Wednesday.<\/p>\n
Presidential candidate Susilo Bambang Yudhoyono acknowledged
\nhe might have to cut the costly fuel subsidies and consequently
\nraise fuel prices next year if international oil prices remained
\nhigh.<\/p>\n
Responding to a question from panelist Lin Che Wei, Susilo,
\nwho has so far been leading in the opinion polls, said that
\ncutting the subsidies was crucial to avoiding fiscal disaster.<\/p>\n
But he was quick to add that any cut in the fuel subsidy would
\nnot cause suffering for low-income people.<\/p>\n
\"We aim to apply a targeted subsidy,\" said Susilo, who got the
\nchance to go first during the second day of a two-day dialog.<\/p>\n
Meanwhile, President Megawati Soekarnoputri failed to give a
\ndirect answer when panelist Mari E. Pangestu raised the same
\nquestion, saying that the next government would have to face the
\ntough reality that oil prices would not decline to below $30 per
\nbarrel in the near future (the Megawati government has proposed
\nwhat many see as an unrealistic oil price assumption of $24 per
\nbarrel and higher fuel subsidy spending of Rp 36 trillion in the
\n2005 draft state budget.<\/p>\n
However, Mega's running mate, Hasyim Muzadi, acknowledged that
\nthe next government would eventually have to adopt the
\npolitically unpopular measure of cutting subsidies due to budget
\nconstraints.<\/p>\n
\"Subsidies will be removed, although gradually, and there will
\nbe compensation (for low income people),\" said Hasyim, who seemed
\nto be more confident in answering questions than his would-be
\nboss.<\/p>\n
Renewed debate on whether the government should continue with
\nthe current expensive fuel subsidy has recently emerged after oil
\nprices soared to record levels of more than US$45 per barrel,
\nwhich may force the government to boost this year's fuel subsidy
\nby 344 percent to Rp 63 trillion from the initial allocation of
\nRp 14.5 trillion (by comparison, development spending in the
\ncurrent state budget is Rp 67 trillion)<\/p>\n
The current government has decided not to raise fuel prices
\nthis year due to the fear of social and political unrest during
\nthe current election season (former authoritarian president
\nSoeharto was forced to step down partly due to his decision --
\nunder pressure from the IMF -- to raise fuel prices). But critics
\nsay that the fuel subsidies mainly benefit car owners, and that
\nthe huge sums involved would be better allocated on other
\npurposes, such as education or defense.<\/p>\n
Susilo and his running mate Jusuf Kalla, and Mega and her
\npartner Hasyim presented their economic platforms separately.<\/p>\n
As in the first day of the dialogue, the limited time allowed
\nto the panelists to ask questions and to the candidates to
\nrespond left the studio audience and television viewers with more
\nquestions than answers.<\/p>\n
But, basically, the two pairings promised economic measures
\nthat would boost growth, create more employment, protect farmers,
\nand boost the role of small and medium enterprises in the
\neconomy.<\/p>",
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