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.