House OKs fuel price increases

House OKs fuel price increases

Urip Hudiono and Abdul Khalik, The Jakarta Post, Jakarta

As people started panic buying and sporadic protests broke out in
some areas of the country, lawmakers had yet to make up their
minds on whether they would approve the government's second and
final revision of the 2005 state budget as of 10:30 p.m. on
Tuesday.

Instead, the 10 factions of the House of Representatives only
managed to deliver their respective views on the proposal during
a plenary session that started at 5 p.m. The legislators had the
draft budget revision as the fourth item on their order of
business.

In the much-awaited session, the majority of lawmakers, led by
the Golkar Party faction, conditionally accepted the draft budget
revision, which envisaged fuel subsidy spending amounting to Rp 89.2
trillion (US$8.68 billion) and a deficit of Rp 25.1 trillion, or
0.9 percent of GDP.

Golkar spokesman Achmad Hafiz Zawawi read out his faction's
view that although increased fuel prices would be burdensome for
the public, the government's move should be seen as an "initial
step toward improving the country's economy".

The faction urged the government to make sure that its direct
assistance scheme -- under which 15.6 million low-income
households will be eligible to receive Rp 300,000 in cash every
quarter -- benefits the targeted recipients.

Only the self-styled opposition parties, the Indonesian
Democratic Party of Struggle (PDI-P) faction and the United
Development Party (PPP) faction, gave "dissenting opinions",
saying they approved the proposed budget revision but
"disapproved of the government's plan to raise fuel prices".

To a chorus of boos from House members, the PPP said the
government should not raise fuel prices prior to the Ramadhan
fasting month and Idul Fitri holidays, but instead "show
innovation by scrapping the subsidies without increasing fuel
prices".

The two factions reminded the government of its promise not to
raise fuel prices after the average 29 percent increase brought
in on March 1.

Meanwhile, the National Awakening Party (PKB) faction
refrained from delivering its opinion, saying it would "monitor
the situation further" before making up its mind.

Legislator Abdul Hadi Jamal of the National Awakening Party
(PAN) faction said his faction proposed that the House defer its
decision to another plenary session, pending an announcement by
the government on the size of the fuel price increases.

The first revision of the 2005 state budget allocated only Rp
76.5 trillion for subsidy spending based on an average annual oil
price of US$45 a barrel, a rupiah - U.S. dollar exchange rate of
Rp 9,300 and annual fuel consumption of 59.6 million kiloliters.

This latest revision -- which has already been approved by the
House Budget Committee -- earmarks fuel subsidy spending at Rp
89.2 trillion.

The Committee has also set the economic growth target at 6
percent, inflation at 8.6 percent and the rupiah-U.S. dollar
exchange rate at Rp 9.500.

It also assumes state revenues of Rp 540 trillion, or 20.4
percent of the GDP, higher than the Rp 516.2 trillion proposed by
the government. The revenue assumption includes tax revenues of
Rp 352 trillion and non-tax revenues of Rp 180.7 trillion.

As panic buying and protests have increased as Oct. 1
approaches, National Police have deployed intelligence officers to
monitor the situation at gas stations and fuel depots across the
country to prevent violations and violence.

National Police deputy spokesman Brig. Gen. Soenarko said
police officers had also been ordered to supervise the
disbursement of the direct assistance payments in post offices
and Bank Rakyat Indonesia (BRI) branches.

"The police will also be on the lookout for demonstrations in
the regions before and after the fuel price increases," he said.

As for the capital, Jakarta Police spokesman Sr. Comr. I Ketut
Untung Yoga Ana, said the Jakarta police had assigned two-thirds
of its 17,000 officers to security duties.

"We will also continue our investigations into fuel hoarding
and the misuse of licenses by fuel agents in Greater Jakarta," he
said.