Govt given one week to reassess fuel, power hikes
The Jakarta Post, Jakarta
A day after an agreement to delay the telephone charge increase, the House of Representatives gave one week to the government to reassess the hikes in fuel and power prices.
"One week is enough for the government to recalculate the increases in fuel and electricity charges," House Speaker Akbar Tandjung told reporters after delivering a speech during a ceremony marking the Golkar Party's 38th anniversary in Bandung, West Java, on Thursday.
He signaled, however, that the reassessment of the fuel and power price hikes had to work out in such a way that there must not be a reduction in the increases. He said: "The government must consider the impact of any reduction on the 2003 state budget and the compensation funds paid as a result of the abolition of the fuel subsidies," he said.
On Wednesday, the House and the government agreed to delay the hike in telephone charges until the end of this year and let the government reassess the increases in fuel and power prices in response to the nationwide protests held against the increases in utility prices.
Taking effect on Jan. 1, fuel prices were raised by up to 22 percent and electricity prices increased by an average of 6 percent, while telephone charges were raised by an average of 16 percent, all of which led to significant increases in other prices.
The protests staged by farmers, bus drivers, fishermen, non- governmental organizations and students became national in scale as the government's initially refused to back down.
The protesters claimed the hikes were too burdensome on the poor.
Separately, during a limited Cabinet meeting on Thursday, President Megawati Soekarnoputri gave her approval to the proposed reviews of the fuel and power price increases.
"We will make adjustments especially to the fuel and electricity hikes without changing the assumptions underlying the 2003 State Budget," Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said after the meeting.
The minister further said that the meeting to determine the adjustments would be held on Friday.
Separately, Minister of Energy and Maneral Resources Purnomo Yusgiantoro has asked state-owned oil and gas firm Pertamina and power utility PT PLN to calculate possible reductions in fuel and power prices.
Sources in Pertamina said that for fuel, it would be possible to cut around 15 percent of the current prices, but that this could not be applied to all types of fuel.
Coordinating Minister for Social Welfare Jusuf Kalla said that making adjustments to the price hikes was only one of several options, but the government had to calculate the capacity of the state budget to cover the additional expenditure required.
"We need to see which revenue allocations can be revised so as to compensate for the reduction of the prices of the two commodities.
"But, the most important thing is that we do not review the 2003 State Budget, and that is why several adjustments will have to be made," he added.
Meanwhile, legislator Alvin Lie of the Reform Faction and Didik J. Rachbini of the Institute for the Development of Economics and Finance (Indef) criticized Wednesday's agreement to only postpone the hike in telephone charges, saying the policy only temporarily relieved the people's anger.
"It's just a consolation for the people, but it does not solve the key problem, the utility price hike" Didik said.
He said it would be wise if the government were to meet the people's demands as the people were not able to improve their incomes and their purchasing power.
If the government agreed to delay all utility price hikes, Didik said, it could set higher tax revenue targets to help finance the state budget by increasing the number of taxpayers.
He also said the government should end its dependence on foreign loans to finance the state budget and national development programs.