Fuel price hike fair for the poor: SBY

Fuel price hike fair for the poor: SBY

Wahyoe Boediwardhana and Ridwan Max Sijabat, The Jakarta Post, Denpasar/Jakarta

Aware that his popularity rating is likely to plunge over planned
fuel price increases, President Susilo Bambang Yudhoyono said on
Sunday his administration would never issue a policy that favored
the rich at the expense of the poor.

Speaking during an informal meeting with local leaders and
members of the tourist industry on the resort island of Bali,
Susilo defended the government's plan to raise domestic fuel
prices next month, despite protests by many economists,
activists, legislators and political parties.

"Please see if there is any government policy that ignores and
hurts the poor. Does the fuel subsidy policy take their side or
not? We are trying to make things fair for (the poor)," Susilo
said.

Critics have said the planned fuel price increases will only
add to the burden on the poor.

The government has said that the savings generated by cutting
the massive fuel subsidies, which have weighed down the budget,
would be used to provide free education, free health care and
inexpensive rice for the poor. The government expects to channel
about Rp 10 trillion (US$1.07 billion) into social programs for
the poor.

Susilo said another of his administration's policies that
favored the poor was the allocation of credits for micro, small-
and medium-sized businesses.

Bank Indonesia, the President said, was following up on this
policy by outlining a strategy to continue increasing credits to
these businesses, and also by dropping the central bank's
benchmark interest rate on these loans.

Presidential spokesman Andi Alfian Mallarangeng said on
Saturday that Susilo was prepared to see his popularity suffer as
a political consequence of raising fuel prices.

"The increase in fuel prices is inevitable and will become
reality in the immediate future. The government is just waiting
for the right time to announce it to the public," Andi said.

Speaking as a panelist at an interactive dialog organized by
the Asian Development Bank (ADB) and the Partnership for
Governance Reform in Indonesia, the spokesman said the President
had no choice but to raise fuel prices to avoid fiscal trouble as
the fuel subsidy became more costly with rising oil prices.

"Unlike in the past, the benefits will now go directly to the
people. Some 36 million people living below the poverty line will
gain financial advantages from this decision since they will
receive cheap rice and free health care, plus their children will
receive a free education during the nine-year compulsory
education program," he said.

Dewi Fortuna Anwar, a political researcher at the Indonesian
Institute of Sciences, said that although raising fuel prices
would be unpopular in the short term, the move would eventually
gain support, especially if Susilo could provide a clear and
effective explanation to the public about the importance of the
policy for the economy.

"Of the utmost importance is that he must explain to the
public why he made this unpopular decision ... and the funds for
the poverty program must be disbursed transparently and audited,"
she said.

She predicted the unpopular policy would meet with strong
opposition from political parties, students and the middle class,
but in the end people would accept the price increases.

Dewi called on Susilo, who is the country's first directly
elected president, to press ahead with tough reform programs to
help resolve the country's economic problems.

She said polls showed the international community had more
confidence in Susilo than voters at home because of his strong
commitment to pursuing his social, political and economic
programs, and creating a democratic government.

HS Dillon, executive director of the Partnership for
Governance Program in Indonesia, said Susilo should strengthen
his alliances not only with major political parties but also with
the voters, especially those who supported him in the
presidential election.

"All decisions and policies Susilo makes will certainly win
political support from the people if they benefit the people," he
said.