Protests over price hike threaten economy<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
The growing protests over a series of government economic policy
\ndecisions taken since the start of the new year could potentially
\nlead to serious social and political turmoil that could badly
\naffect the overall economy this year, economists have warned.<\/p>\n
Centre for Strategic and International Studies (CSIS)
\neconomist Hadi Soesastro criticized the government for failing to
\nprovide concrete explanations to the public about the importance
\nof the policies.<\/p>\n
\"The government has to convince the people that the policies,
\nincluding the utility price hikes, are correct and prudent so
\nthat there will be no more rejection from the public,\" he told
\nThe Jakarta Post on Sunday.<\/p>\n
The government recently announced a series of major economic
\npolicies to help fix the country's battered economy. They include
\nreleasing former bank owners from criminal charges for past
\ncrimes if they are deemed cooperative in repaying billions of
\ndollars in debts to the state; the sale of the government stake
\nin state-owned telecommunications firm PT Indosat; and raising
\nfuel, electricity and telephone charges.<\/p>\n
The simultaneous increases in utility prices have angered both
\nworkers and businesses as they will impose a heavier burden on
\nthe many people already suffering from years of economic
\ndifficulties and soaring production costs.<\/p>\n
Some labor unions are planning to stage massive demonstrations
\nto protest the fuel and electricity hikes.<\/p>\n
\"I'm concerned that this collective anger could lead to
\npolitical chaos that would cause the country to lose the momentum
\nfor economic recovery,\" said economist Drajat Wibowo of the
\nInstitute for the Development of Economics and Finance (Indef).<\/p>\n
He said that the government's real intention in forcing
\nthrough the utility price hikes simultaneously this year was
\npolitical in nature as it was trying to avoid raising prices in
\n2004 during a general election year.<\/p>\n
Another Indef economist, Didik J. Rachbini, criticized the
\ngovernment for its incompetence and insensitivity in dealing with
\neconomic affairs.<\/p>\n
\"Even before these controversies, the investment situation was
\nalready bad. After these events, the picture will surely get much
\nworse,\" he said, adding that without new investment, it would be
\nimpossible for the government to achieve its 4 percent economic
\ngrowth target for this year.<\/p>\n
University of Gadjah Mada (UGM) economist Sri Adiningsih said
\nthat the fuel and electricity hikes would reduce people's
\npurchasing power, which in turn would put a brake on domestic
\nconsumption, which has for the past couple of years been the main
\ndriver of economic growth amid a lack of investment and weakening
\nexports.<\/p>\n
She urged the government to revise the fuel price hike policy,
\nparticularly the 22 percent increase in the price of automotive
\ndiesel as this was the main fuel used by public transportation.<\/p>\n
The government issued a \"release and discharge\" policy for
\ncooperative ex-bank owners as during the past frustrating four
\nyears, the government had not been able to collect the debts owed
\nby the bankers. But critics have said that this policy ran
\ncontrary to the public's sense of justice.<\/p>\n
The sale of the Indosat stake to Singapore Technologies
\nTelemedia was protested mainly by opposition political parties
\nled by People's Consultative Assembly (MPR) Speaker Amien Rais,
\npartly due to a lack of transparency in the process.<\/p>\n
Amien and other opposition politicians have also demanded that
\nthe government cancel the utility price hikes.<\/p>\n
The government has said that the utility price hikes were
\nimportant to cut expensive subsidy spending given the limits on
\nthe state budget, and to help prevent state utilities from going
\nbankrupt.<\/p>\n
But another CSIS economist, Pande Raja Silalahi, criticized
\nthe hikes for not being accompanied by a government drive to
\npromote bureaucratic efficiency and fight corruption.<\/p>\n
\"It should have been done in stages, not all at the same
\ntime,\" he told AFP.<\/p>\n
\"What is being shown instead to the population is differences
\nof opinion between decision-makers. We have to resign ourselves
\nto the fact that we have an incompetent government.\"<\/p>",
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