Don't hype fuel price hikes: Susilo

Don't hype fuel price hikes: Susilo

Rendi A. Witular and Fabiola Desy Unidjaja, The Jakarta Post/Jakarta

Fearing that the government's plan to raise fuel prices will
become a political commodity, President Susilo Bambang Yudhoyono
urged politicians not to take advantage of the price hike by
provoking the public and creating social instability.

Speaking during the opening of the Indonesian Capital Market
Seminar and Expo on Friday, the President called on politicians
and protesters to stage peaceful rallies if they wanted to
protest the fuel hike.

"Protests from the public, including politicians, on the fuel
price hike plan are understandable. I'll allow that. But the
protests must not contain any political motives, which may
disturb our security and stability," he said, without referring
to specific politicians or political parties.

The government is planning to reduce the fuel subsidy, which
will mean a raise in fuel prices by an average of 29 percent. The
plan, however, has sparked sharp criticism from the House of
Representatives.

After intense lobbying by a number of ministers this week, the
House's Budget Commission, as well as Commission VII for energy
and Commission XI for financial affairs, have not yet approved
the plan.

Susilo hinted that the fuel price hike would likely go into
effect in the near future without having to wait for House
approval.

Many political pundits believe that such a move would spark
public unrest, which would affect Susilo's popularity,
particularly after it declined following his perceived slow
progress in improving the country's economy during his three
months in power.

The president emphasized that the country's economy was on the
verge of collapse under the weight of the fuel subsidy, which has
turned out to be unproductive and unjust.

"Many have warned me that increasing fuel prices will lower my
popularity. But I told them that I am willing to prevent our
economy from collapsing at the expense of my popularity. A true
leader is not afraid to make unpopular choices when it comes to
policy," said Susilo.

"The current fuel subsidy is considered unjust for the lower-
income people. I assure you there will be no price hike for fuel
consumed by that segment."

Susilo also told the capital market players that the price
hikes would not disturb the current stable economic condition
since the low-income assistance funds taken from fuel subsidy
will be allocated for development and welfare.

Vice President Jusuf Kalla said earlier that without the hike,
the budget expenditure for the fuel subsidy alone would skyrocket
to over Rp 100 trillion (US$10.8 billion) this year, leaving
almost no room for the government to allocate funds for
infrastructure development.

Sufficient infrastructure is badly needed to support the
economy and employ people so it can grow by more than 6.5 percent
on average for the next five years.

Meanwhile, State Minister of National Development Planning Sri
Mulyani Indrawati warned that the upcoming fuel price hike would
drive the inflation rate higher by 1.5 percent.

However, she said, the government remained optimistic that it
would be able to control the inflation target this year at around
7 percent.

"The fuel price hike will trigger an increase of prices of
other goods and commodities. But we will try to keep downward
pressure on inflation to maintain it at a reasonable level," she
said.

Part of the efforts to keep inflation down include conducting
market intervention to ensure availability of staple food and
other goods, as well as preventing speculation by suppliers.