Fuel prices hiked, sacrifices called

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