Jakarta stocks drop on unrest concern

Jakarta stocks drop on unrest concern

Bloomberg, Jakarta

Indonesian stocks fell for the first day in three on Wednesday on
concern government plans to raise fuel prices later this week
will spark unrest amongst the nation's poor. PT Telekomunikasi
Indonesia led declines.

"There will definitely be demonstrations, creating concerns"
about riots, said Bambang Setiadi, who helps manage the
equivalent of US$140 million in assets at PT Sinar Mas Sekuritas
in Jakarta.

Higher fuel prices mean companies "face higher costs while
consumer purchasing power will decline."

The Jakarta Composite Index fell 9.75, or 0.9 percent, to
close at 1,027.89.

Parliament late on Tuesday approved the government's plan to
cap this year's fuel subsidies at Rp 89.2 trillion ($8.6
billion), paving the way for President Susilo Bambang Yudhoyono
to raise fuel prices on Oct. 1.

Telekomunikasi, the nation's biggest telephone company, fell
Rp 50, or 1 percent, to Rp 5,150. PT Kalbe Farma, the biggest
drugmaker by sales, lost Rp 20, or 2.4 percent, to Rp 820. PT
Ramayana Lestari Sentosa, the country's second-biggest retailer
by sales, slipped Rp 20, or 2.6 percent, to Rp 760.

PT Astra International, Asia's biggest auto retailer by value,
lost Rp 300, or 3.3 percent, to Rp 8,850 on concern higher fuel
prices will cut demand for cars and motorcycles.

The government is allocating Rp 4.8 trillion to 15.5 million
poor families to compensate them for the fuel price rise and
preempt protests.

Many poor people rely on government subsidized fuel and an
attempt to increase tariffs in 1998 contributed to protests that
triggered the ouster of former dictator Suharto.

Subsidized gasoline sells for less than half the international
price.

Still, the government needs to cut the cost of subsidies to
stop a drain on the nation's finances. The Jakarta Composite
Index has dropped 15 percent in dollar terms the past three
months as investors fret Indonesia won't be able to afford to
continue subsidizing fuel with oil prices at record levels.

Indonesia, the only member of OPEC that is a net oil importer,
has seen the rupiah lose 6.8 percent of its value the last three
months as the cost of crude imports increase. Oil has surged 49
percent on global markets this year.

PT Bank Danamon, the country's fifth-biggest lender by assets,
slipped Rp 50, or 1.3 percent, to Rp 3,850 on concern higher
interest rates will boost costs to pay depositors. PT Bank
Central Asia, the second-biggest, declined Rp 75, or 2.2 percent,
to Rp 3,325.

The following stocks also rose or fell in Jakarta. Stock
symbols are in parentheses after company names.

PT Hexindo Adiperkasa, which sells Hitachi Construction
Machinery Co's tractors and other heavy equipment, jumped Rp 60,
or 5.6 percent, to Rp 1,140, its biggest gain since Aug. 30.