Fuel price hikes 'a potential cause of political instability'
Fuel price hikes 'a potential cause of political instability'
JAKARTA (JP): Several observers warned yesterday that Monday's
government decision to raise fuel and electricity prices amidst
the economic hardships faced by the people and strong demands for
reform, could be a potential source of political instability.
Christian Wibisono, director of the Center for Indonesian
Business Data, said the fuel and electricity price increases
would negatively impact national stability, "but we cannot
measure how far the negative impacts will be."
"The price hikes will certainly affect political stability
during such a severe situation. It is difficult, however, to make
a prediction on how much it will negatively impact stability," he
said after attending a seminar on the Asian crisis organized by
the Center for Strategic and International Studies (CSIS) here
yesterday.
Pande Radja Silalahi, former rector of Parahyangan Catholic
University in Bandung, West Java, said the fuel and electricity
price hikes would worsen the political and economic situation,
especially if the government failed to adequately cushion the
harsh impacts felt by the people.
"The monetary crisis, plus the student movement demanding
political and economic reforms, has already brought political
stability to the brink.
"Now the government raises fuel and electricity prices. This
move could jeopardize political stability because it will
certainly worsen the hardships faced by the majority of people,"
he said.
He argued that the government must sufficiently explain the
controversial decision to the people, in a transparent and honest
manner.
"The government should provide repeated explanations on its
reasons behind the decision so the people can accept it," he
said.
Pande himself claimed that he understood the considerations
behind the price increases, "but most people have yet to
understand the economic and political reasons behind the fuel
price hikes."
He also pointed out that the government made the decision
without any endorsement from the House of Representatives (DPR).
In Yogyakarta, sociologist Loekman Soetrisno of the
Yogyakarta-based Gadjah Mada University, said yesterday that the
government must hastily follow through with its promises to
subsidize other sectors of the economy.
The government, according to Loekman, said it was terminating
fuel subsidies so the money could be allocated to help other
areas such as food and medicine.
"The rise in fuel prices will create a precarious situation.
It would become even more dangerous if, as fuel prices rose, the
price of medicines and food became too high for the people as
well," he said as quoted by Antara.
But he was doubtful that the government could fulfill its
pledge to stabilize prices even with large subsidies.
He said that failure to control prices in such important
commodities like food and medicines would only heighten public
mistrust felt toward the government.
"Just so you know, the promise to subsidize food and medicines
will be well remembered. That's why they will be tolerant of the
fuel price increases as long as other prices become affordable,"
he remarked.
Economist Anggito Abimanyu, also of Gadjah Mada University,
was skeptical that food and medicine prices would go down.
"Fuel prices are one of the key factors in the chain of
production costs," he argued.
He questioned the government's move to raise fuel prices at
this point, especially since it had taken other "expensive
measures" to bring down and stabilize prices. This latest move
would only further push up the market price of various
commodities, he said. (rms/mds)