Govt to ease impact of fuel price increase for the poor

Tertiani ZB Simanjuntak, The Jakarta Post, Jakarta

The government was trumpeting a new set of policies on Wednesday that are designed to ease the burden the poor will have to shoulder in the wake of the fuel price hike.

The policies will allow members of the lower income group to pay less for education, rice and medicine so as to offset the soaring cost of living.

Coordinating Minister for Social Welfare Jusuf Kalla said that the government had allocated Rp 2.8 trillion (US$270 million) for the social compensation fund out of the Rp 11.5 trillion fuel subsidy allocation.

"The increase in fuel prices, which will be announced in a matter of hours, will certainly hurt 19 percent of the entire population, or 40 million people from the lower income group.

"These strategies will mean that their expenditure will not increase even though they pay more for fuel," he told reporters after a ministerial meeting held under his coordination at the Office of the State Minister for Administrative Reform.

The government had planned to raise fuel prices by up to 25 percent some time this month. Even before the announcement of the increase, the prices of various basic commodities had started to increase.

Kalla argued that the lower income group would not be the hardest hit as their main fuel requirement was kerosene, although they would have to pay more on public transportation fares.

The minister said that the fuel hike would add to the expenditure of a family in the lower income group to the tune of Rp 170,000 (some $16). Thanks to the new policies, however, the burden on the poor would be reduced to Rp 105,000.

Kalla said each poor family should register so as to obtain scholarships for their children from the Ministry of National Education and to get cheap generic medicines at local community health centers.

"The government will also supply cheap rice at Rp 1,000 per kilogram throughout the whole year," he added.

Kalla claimed to have improved the mechanism for monitoring the implementation of the policies so that 95 percent of the funds would reach the needy.

Last year, much of the Rp 800 billion in compensation funds missed their intended targets.

Kalla said the remaining compensation funds would be used to finance other programs aimed at supporting the poor, including better food, health, transportation, education, and clean water programs. Funds would also be disbursed to empower small and medium enterprises, cooperatives and fishermen.

Education would receive the lion's share of the funds at Rp 1.28 trillion, followed by health and social support at Rp 570 billion, and food support at Rp 500 billion.