Fuel prices hiked, sacrifices called
The Jakarta Post, Jakarta
After weeks of uncertainty, the government has announced a hike in domestic fuel prices by an average of 29 percent, which would come into effect on March 1, despite objections from the House of Representatives and the public.
The government asked the public for their understanding, arguing that the price hike is for the greater benefit of the nation as the move would eventually lead to greater funding allocations for welfare programs, encourage more efficient fuel usage and prevent fuel smuggling.
Announcing the plan late on Monday, Coordinating Minister for the Economy Aburizal Bakrie said such a decision was bound to create a dilemma, even if it was based on sound reasons.
"Whether we like it or not, the decision will also demand sacrifices from each and every one of us. Some of us may feel that their lives will become harder," he said. "But I'm sure that is all for a better future."
Without the fuel hike and assuming an oil price of US$35 a barrel, the government would have to spend up to Rp 60.1 trillion on fuel subsidies, which would have actually benefited the wealthy more, Aburizal continued.
"As we know, the price of oil recently topped $50 per barrel," he said. "If the subsidies reach Rp 73 trillion, the government would have to spend Rp 200 billion each day, and such an amount could hurt the nation's financial condition."
But, with the fuel price hike, fuel subsidies for the year would top Rp 39.8 trillion or Rp 110 billion per day. "The amount is already above that allocated in 2005's budget, which stands at Rp 19 trillion," Aburizal said.
During a consultative meeting with the House's budget commission earlier in the day, the commission's vice chairman, Emir Moeis, said a majority of the House would reject the planned fuel price increases.
"If the government does raise fuel prices, then they will do it at their own risk," he warned.
National Police chief Da'i Bachtiar said the police were prepared to deal with any protests that might follow the price increase announcement. He also said the police would crack down on fuel hoarding, which could threaten the fuel supply.
State Minister for State Enterprises Sugiharto said the country's fuel stocks were sufficient for 21.5 days, from the usual 22 days.
"We do not have any indications of fuel hoarding, but we will continue to be prepared for any possibilities," he said.
National Land Transportation Association chairman Murphy Hutagalung said a fuel price hike of about 30 percent would only result in a 10 percent increase in public transportation fares.
Minister of Transportation Hatta Radjasa has warned land transportation owners not to raise their fares by more than 10 percent. However, he acknowledged that sea transportation costs could rise by as much as 30 percent, but was quick to add that his ministry had asked state-owned shipping company PT Pelni not to increase the prices of their economy-class tickets.
As with similar moves in the past, there has been a public outcry over the planned fuel price increases.
Even before the announcement rallies were held across the country to denounce the plan, with protesters saying the hikes would hurt the poor.
Hundreds of students and activists from non-governmental organizations staged a demonstration in front of the State Palace in Jakarta on Monday to demand the government drop the plan. The protesters said that instead of raising fuel prices, the government should locate state assets that had been stolen.
In Yogyakarta, members of the Association of Muslim Students and the Alliance of Yogyakarta Communities Against the Fuel Price Hike took to the city's streets. They unfurled banners and posters accusing the government of favoring the rich and investors.
In a joint statement, the groups said increasing fuel prices was unfair and would hit the poor the hardest, as increases in the prices of basic commodities would follow the higher fuel prices.
In the Southeast Sulawesi capital of Kendari, dozens of students from the Haluoleo University Family blocked the road leading to the university's campus to protest the government's plan.
They asked bus drivers to stop working and join the rally. The protesters marched to the provincial legislative building to demand councillors urge the central government to back down from its plan.
Also in Kendari, schoolchildren took part in a rally held by the United Student Alliance and the National Democratic Student League at the Wuawua traffic circle.
Low-income assistance fund
Scholarships for 9.6 million students Rp 5.64 trillion Rice for 8.6 million poor people Rp 5.44 trillion Infrastructure development in 26,737 villages Rp 3 trillion Health services for 36.1 million poor people Rp 2.17 trillion Provision of 225,000 low-cost houses Rp 0.6 trillion Subsidy for family planning program Rp 0.1 trillion Subsidy for microcredit interest Rp 0.2 trillion Social services Rp 0.65 trillion
Total Rp 17.80 trillion