Fuel prices hike won't hurt the poor, says government
The Jakarta Post, Jakarta
Amid mounting concern over the negative impact of its fuel price hike policy, the government said the poor should not be affected as it had allocated to them sufficient compensation funds of Rp 2.85 trillion (US$274 million) this year.
Minister of Information Syamsul Muarif said on Wednesday the funds would be disbursed to some 55 million poor people in the country.
Speaking at a media conference held to disseminate more information about the fuel price hike policy, he said that each poor family, with an average of five members, would receive around Rp 350,000 worth of assistance.
The money would be more than sufficient to offset the increase in the expenditure of poor families, estimated at about Rp 170,000 per family per year, he said.
The conference was also attended by Minister of Energy and Mineral Resources Purnomo Yusgiantoro and Minister of Cooperatives Alimarwan Hanan.
Syamsul said the higher expenditure of poor families was caused by an increase in fuel prices, a 10 percent to 20 percent hike in transportation costs and inflation.
According to government data, poor people in the country total around 40 million, with monthly expenditure of Rp 72,909 to Rp 95,929.
The government raised fuel prices by an average of 22 percent starting from Jan. 17. The price will change again in March, thereafter to be set monthly based on fuel prices in neighboring Singapore.
The progressive fuel price hikes are part of the government's attempt to reduce fuel subsidies in order to ease the burden on the state budget.
It could also help minimize the widespread smuggling of heavily subsidized fuel products out of the country.
But the raising of fuel prices is politically sensitive in the country, particularly as the public has endured years of economic hardship.
Even before the government raised fuel prices, the price of some basic goods, such as rice and kerosene, had soared due to massive hoarding, although prices have now started to go down again.
The fuel compensation program will therefore play an important role in minimizing the negative impact on poor people.
However, similar compensation programs have been a target of corruption in the past.
Syamsul said the government would do its best to channel the funds to the targeted people and minimize fund misuse.
The government would carry out an audit of the funds to ensure transparency in their allocation, he said, adding that it would also audit the compensation funds disbursed during the past two years.
Of the total Rp 2.85 trillion in compensation funds, the government will allocate about Rp 1.28 trillion to the education program, Rp 570 billion to health and social support, and Rp 500 billion to food support.
The government allocated Rp 800 billion and Rp 1.8 trillion to the compensation fund in 2000 and 2001 respectively.