Tue, 08 Mar 2005

Fuel price hike effects under control: Govt

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

A week after the fuel price increases, the government says that the effects of the hikes on the public are still under control and plans to talk to the House of Representatives to further revise the 2005 state budget.

The further revision would legally allow the government to disburse Rp 10.5 trillion (US$1.13 billion) taken from the fuel subsidy to finance its programs targeted at the poor.

"In general, everything is manageable," said Minister of Communications and Information Sofyan Djalil after a Cabinet meeting to evaluate the impact of fuel price hike at the Vice Presidential Office.

"Security-wise, the government considers the public protests (against the fuel price hike) to be a part of democracy. In fact, the government would like to thank the demonstrators for having held peaceful rallies."

Sofyan said retailers had already started increasing prices in January, before the government had even cut the fuel subsidy on March 1.

"Therefore, the effects of the fuel price hike will not be great. We hope there will be no significant increase in prices in March," he added, saying that there were sufficient fuel supplies nationwide for 22 days.

Meanwhile, Minister of Trade Mari E. Pangestu said prices had remained stable since the March 1 fuel price increases.

"The (prices) of basic commodities have yet to increase as they are still being sold out of existing stocks. Basic commodities prices usually rise after the elapse of two weeks from the date of the increase in fuel prices," she said.

"But the rice harvest will be taking place soon so that the price is expected to decrease. As for sugar, as it is still being imported, prices will also drop," she added.

Despite monitoring the prices of basic commodities, the government is also focusing on a plan to consult with the House on the further revision of the state budget and on its plan to channel an additional Rp 10.5 trillion to the poor.

"The most important thing is to monitor the disbursement of money out of the assistance fund for the disadvantaged," Sofyan said.

To do so, the government would work with non-governmental organizations (NGOs), universities and religious groups so as to avoid corruption.

Prior to the disbursement of the additional funds, the government would first disburse some Rp 7.3 trillion out of the already approved 2005 state budget.

"This will start in April," he said.

Prior to the fuel price increases, the government had promised that a total of Rp 17.8 trillion would be provided to finance a series of programs, particularly free education, subsidized rice for the poor, rural infrastructure projects and health programs.

Apart from those efforts, the government says it will also stage discount markets at the end of every month starting March to help the poor buy basic commodities. These would be in addition to the government's regular market interventions.

Mari said the government would jointly work with food distributors to hold discount markets but added that her ministry was still studying the right format for the scheme.

"We have yet to decide if it will take place in Greater Jakarta alone or also in other provinces," she said.