Govt to raise fuel prices before Idul Fitri

Rendi A. Witular, The Jakarta Post, Jakarta

It may not be the kind of Idul Fitri present most Indonesians would wish for, but the government has confirmed it will raise fuel prices in early October prior to annual celebration.

The decision to increase fuel prices -- in a bid to cut the costly fuel subsidy that could exceed US$10 billion this year -- was delivered by State Secretary Yusril Ihza Mahendra on Monday after a video-conference Cabinet meeting jointly led by President Susilo Bambang Yudhoyono from St. Louis, Missouri, the United States, and Vice President Jusuf Kalla in Jakarta.

There were no details on the exact date of the fuel price increase or by how much prices will go up.

"We have not come up with a definite date for the rise, but we will definitely be preparing for that in early October," said Yusril.

The increase, should it be executed, is a bold political move for Susilo, particularly given the timing. Muslims will start the fasting month of Ramadhan on Oct. 5 and celebrate Idul Fitri on Nov. 3 and Nov. 4.

During the month, many Indonesians will spend more on food and goods. With all prices likely to rise along with the fuel prices, there is the possibility for demonstrations and unrest.

The government's decision to raise fuel prices during the fasting month could indicate a more credible social safety net has been set up to protect the poorest members of society from the higher prices.

The government announced on Friday it would give out Rp 100,000 (about $10) in cash per month to 15.5 million families, or around 64 million people, living on or below the poverty line in order to provide them some protection from the fuel price increase.

The government will disburse some Rp 4.8 trillion in direct compensation this year.

During the meeting, Susilo instructed Kalla to coordinate the completion of the low-income assistance fund, as well as to ensure a similar compensation fund allocated during the fuel price hike last March reached those in need.

"I do not want poor people who are eligible for the fund not to receive it because the money has instead gone to state officials' families who are not poor," Susilo said as quoted by Antara. "This must not happen."

The earlier compensation fund is distributed as an indirect subsidy in the education, health and rural infrastructure sectors.

Susilo also instructed Coordinating Minister for the Economy Aburizal Bakrie to coordinate with Minister of Transportation Hatta Radjasa and Minister of Trade Mari Elka Pangestu to ensure the availability of staple foods and public transportation in the wake of the fuel price hike.

Minister of Manpower and Transmigration Fahmi Idris was told to anticipate mass layoffs as a result of the hike.