Painful measures<\/p>\n
Most analysts are likely to agree on the economic imperative
\nfor the increases in the price of fuel, telephone calls and
\nelectricity announced by the government on Wednesday. Most
\npoliticians also seem to have realized that such painful measures
\nneeded to be taken, otherwise the public might have faced supply
\ndisruptions. After all, the price increases had the prior
\napproval of the House of Representatives.<\/p>\n
But the government should not simply sit back and relax,
\nassuming that the public will simply accept the bitter pills,
\nespecially as, within the political context of our emerging
\ndemocratic system, the House is not yet perceived as the true
\nrepresentative of the people's interests. The public has instead
\nperceived most House members as simply corrupt politicians.<\/p>\n
The measures, which will hurt those on low incomes the most,
\nhave deeply upset the public's sense of justice, being introduced
\nat the same time as the government decided to release from
\ncriminal charges \"cooperative large debtors\", whom the public see
\nas partly responsible for bankrupting the national economy.<\/p>\n
Fuel price increases were widely predicted as a result of the
\nnew fuel-pricing policy introduced last January, which floated
\nfuel prices, except those for kerosene, on the international
\nmarket, using Mid Oil Platts Singapore (MOPS) quotations as a
\nreference. This means that domestic fuel prices are adjustable
\nevery month based on MOPS quotations and the rupiah's exchange
\nrate.<\/p>\n
As international oil prices have risen markedly due to fears
\nof shortages caused by the U.S. threat to attack Iraq, a major
\noil producer, the government has consequently increased the oil
\nprice range assumed for production costs from US$19 to $26, to
\n$22 to $28.<\/p>\n
Consequently, domestic fuel prices have had to increase as
\nwell, otherwise the Rp 13.5 trillion allocated for fuel subsidies
\nduring the current fiscal year would have been far from
\nsufficient. Another alternative -- maintaining fuel prices at
\ntheir current levels -- would endanger fiscal sustainability at
\nthe expense of macroeconomic stability and hinder efforts to
\nimprove efficiency in fuel usage and to diversify the sources of
\ncommercial energy.<\/p>\n
The same rationale applies to the increases in telephone and
\nelectricity prices. The 15 percent hike in telephone rates is the
\nsecond phase within a total of 45.50 percent price increase
\nplanned for 2002 to 2004 to attract new investment in order to
\nexpand the telephone network.<\/p>\n
Likewise, the 6 percent rise in electricity prices is part of
\nthe quarterly increase that has been agreed on by the government
\nand House for the whole fiscal year. Without a price increase,
\nnot only would the electricity subsidy far overshoot the Rp 4.05
\ntrillion budgetary appropriation set for the fiscal year; an even
\nmore damaging impact would be a power crisis three to four years
\ndown the road as no new power generation investment would be
\ncommercially feasible.<\/p>\n
But, to go back to the basic question: Can the government take
\nit for granted that the public will simply accept the painful
\nmeasures?<\/p>\n
The answer is certainly a resounding no. At a time when
\nincreasing numbers of people have been suffering from the
\neconomic crisis and when unemployment, already at a potentially
\nexplosive level, is likely to rise, the additional burdens are
\nlikely to incite public anger through street demonstrations and
\nfurther embolden the already radical labor movement.<\/p>\n
Public acceptance, which is critical to the effectiveness of
\nthe measures in achieving their objective, will depend on how the
\npublic will perceive the painful policies as fair, necessary and
\neffective.<\/p>\n
The government is trying to establish fairness by protecting
\nthe poorest segment of the public from the brunt of the higher
\nprices. The government has said it will increase to Rp 4 trillion
\nthe budgetary appropriation for helping the poorest families to
\nbear the higher prices. The government has also decided to
\nmaintain price subsidies for kerosene, the most-widely used fuel
\nby poor households, and for small electricity users, who account
\nfor the majority of the state electricity company's customers.<\/p>\n
But the public's sense of fairness also depends on the
\nperception of whether the government is seen to be addressing its
\nfull share of the burden by minimizing waste and inefficiency
\ncaused by corruption and by behaving and acting out of a genuine
\nsense of urgency and crisis. This is an area where the
\ngovernment's performance is utterly disappointing and its
\ncredibility critically low.<\/p>\n
The government's extreme lack of sense of urgency within the
\nreform movement and the virtual absence of a sense of crisis
\nwithin the behavior and lifestyles of most senior officials and
\npolitical leaders have even prompted the public to think that the
\npolicies, which would only add to their suffering, are really not
\nnecessary at all.<\/p>\n
The government should go all out to convince the public that
\nthese painful measures are being taken in the public interest and
\nare based on the principle of equitable burden-sharing. Otherwise
\nthe bitter pills could cause a new bout of social unrest at the
\nexpense of economic and political stability.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/painful-measures-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}