Govt to ease impact of fuel price increase for the poor

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.