Government plans to subsidize public transportation

Government plans to subsidize public transportation

The Jakarta Post, Jakarta

In response to the public outcry over moves by some public
transportation owners to raise fares following the fuel price
increases, President Susilo Bambang Yudhoyono said on Friday the
government would subsidize public transportation.

The subsidy would ease the financial burden on public
transportation users not eligible for low-income assistance funds
from the government.

During an unannounced visit to Merak and Labuan ports in
Banten on Friday, Susilo said the subsidy was necessary because
the fuel price hike, which came into effect on March 1, had
driven up transportation fees.

"We see the need for additional funds to reduce the cost of
public transportation for the poor. We believe we can provide a
subsidy although we have not allocated for it in the state
budget," he said as quoted by Antara.

Susilo did not announce the size of the planned subsidy,
saying it required further discussion with the Ministry of
Finance and the House of Representatives.

The government announced on Feb. 28 it was cutting the fuel
subsidy, resulting in an average increase in fuel prices of 29
percent. The subsidy was slashed to reduce the burden on the
state budget, encourage more efficient fuel usage and prevent
fuel smuggling.

To help offset the impact of higher fuel prices, the
government has promised to channel Rp 17.8 trillion (US$1.95
billion) saved from cutting the subsidy into programs targeted
directly at the poor.

Susilo said the money for the transportation subsidy would not
be taken from the funds destined for the low-income assistance
programs, which will include a scholarship program, the purchase
of subsidized rice for the poor, the construction of rural
infrastructure and health programs.

Minister of Transportation Hatta Radjasa has ordered land
transportation operators not to raise their fares by more than 10
percent. However, many of the operators have raised fares by an
average of between 20 percent and 35 percent.

There have been nationwide protests over the fuel hike policy,
but they have been lessening in intensity.

Of the 10 factions in the House of Representatives, eight also
rejected the government's decision to raise fuel prices.

Vice President Jusuf Kalla said the government was more than
ready to face an inquiry by the House of its fuel hike policy.

"The government is ready to provide sufficient data and
information to the House to support our decision," he said at his
office.

Legislators from seven factions asked the House speakers on
Thursday to employ the legislative body's right of investigation
to launch an inquiry into the fuel hike policy.

The lawmakers accused the government of violating Law No.
36/2004 on the 2005 state budget and Law No. 17/2004 on state
finances, by failing to involve the House in revising budget
allocations in cutting the fuel subsidy.

Kalla denied the accusation, saying the government had done
nothing illegal.

"The government had to make adjustments to the state budget
following the sharp increase in global oil prices, which rose
much higher than our assumption in the state budget," he said.

"The government was not required to seek the House's approval
to make this decision. If we have to get approval from the House
before making any decision, the state will not be able to run
efficiently," said Kalla, adding that the government would
discuss budget revisions with the House next month.