Govt urged to curb corruption prior to fuel price increase

Rendi A. Witular, The Jakarta Post, Jakarta

As corruption in the provision of public services and a high-cost economy continue to burden the business community, the government's plan to hike the prices of oil-based fuels was the last thing that business people needed.

Higher fuel prices will only place new burdens on both employers and workers, said the Indonesian Employers Association (Apindo) secretary-general Djimanto.

"We are tired of the government's repeated pledges to combat corruption. Smuggling and illegal fees are still rampant and have gradually undermined our existence. We don't want higher fuel prices to add to the list of our woes," he said on Friday.

The employers' objections to the higher fuel prices were expressed during a meeting between the representatives of workers and employers and the five economic ministers -- Coordinating Minister for the Economy Aburizal Bakrie, Minister of Trade Mari Elka Pangestu, Minister of Industry Andung Nitimihardja, Minister of Transportation Hatta Radjasa and Minister of Manpower and Transmigration Fahmi Idris.

President Susilo Bambang Yudhoyono confirmed on Friday that fuel prices would go up on Oct. 1, with State Minister of National Development Planning Sri Mulyani Indrawati saying earlier that the hike would likely be in the range of 50 percent in order to ensure budget sustainability.

Aburizal said that apart from the government's efforts to root out corruption, it would also provide tax incentives to the business community and workers under draft amendments to the tax legislation being deliberated by lawmakers.

During the meeting, the labor representatives also urged the government to raise their minimum wage before or immediately after the fuel price hike to enable people to cope with higher food prices and transportation costs.

They also urged the government to ensure that "there will be no massive layoffs after the hike" by companies trying to cut production costs.

"If this happens, we will stage strikes and demonstrations," said Ruslan, representing the workers' side, adding that the unions also urged the government to improve public transportation.

Responding to the submissions, Fahmi said the government was planning to raise the minimum wage next year by between 10 percent and 15 percent.

"We cannot immediately raise wages right after the fuel price hikes as this would worsen inflation. We plan to raise them starting on Jan. 1, 2006." he said, adding that the government had issued a ruling to allow workers' wages keep pace with the standard human needs (KHL) index.