Uproar over price hikes

Uproar over price hikes

The government has two options for coping with the massive
public opposition to the increases in the prices of fuels,
electricity and telephone calls that were effected simultaneously
last Wednesday.

President Megawati Soekarnoputri could review the phasing-in
of the price hikes or go all out to enforce wholesale the painful
measure.

Which ever of the alternatives would be taken, though, one
thing is certain. No amount of military or police would be able
to safeguard the measure if the majority considered it grossly
unfair and if the climate did not convince the public that
everyone would share the burden equally.

The government should realize that the timing and the
sequencing of the price increases was completely wrong. It was
indeed a gross mistake for the government to have decreed the
simultaneous utility price increases without adequate
preconditioning of the people.

It was further a blatant insult to the public's sense of
justice to increase the burden on the public at the same time as
the government was releasing from criminal charges the largest
conglomerate debtors, who are held by the public as partly
responsible for the economic crisis.

This inconsistency created the perception that the burdens
inflicted by the economic crisis are not equally shared between
the different groups of people.

The massive public protest against the price policy should
again jolt the government to the painful realization that
approval from the House of Representatives does not always amount
to national political consensus nor to public acceptance or
support. This means that the government should always go all out
to sell its policies to the public.

However, the policy cannot be sold in a vacuum, meaning that
the environment should support the credibility of the policy and
the government. This requires the government to work harder to
convince the people that it has shared its fair share of burden
by strictly implementing austerity measures, minimizing waste
caused by inefficiency and corruption, and dealing firmly and
quickly with conglomerates alleged to have been partly
responsible for bankrupting the economy.

It is not yet too late for the government to review the policy
and take corrective measures such as gradually spacing in the
price increases with the least damage to fiscal sustainability
and macroeconomic stability.

But even this corrective measure would not automatically gain
public support if the government failed to reach out to the
people, explaining: How crucial the policy is for preventing the
national economy from collapsing; how uneconomically low utility
prices would eventually cause a massive disruption in the supply
of utilities and cause the state budget deficit to explode to
uncontrollable levels and spiraling inflation; how the subsidized
fuels have so far been enjoyed mostly by the well-to-do families;
how the wide differences between domestic and international fuel
prices had been exploited by profiteers by smuggling cheap fuels
overseas; how the government would contain the inflationary
pressures from the price hikes; how the government would ensure
that the Rp 4 trillion appropriated for social safety-net funds
would reach the targeted poor families.

Given the wide-ranging impacts of the price increases,
separate individual briefings by economics ministers to the mass
media or politicians would not be effective to gain public
support.

It should be President Megawati herself who should lead the
communication campaign by personally addressing the nation,
talking honestly to the people and appealing for their
understanding and support.

Megawati should have realized how her late father, Sukarno,
the first president of the country, had succeeded, through
effective communications and lively public speeches to the
nation, in rallying public support and convincing people to make
sacrifices, even during the most difficult times of their lives.

Megawati is obviously not as good and effective an orator and
communicator as her late father, but as a woman and housewife she
could offset her inability to make lively speeches by appealing
to the emotions of the people.

The general public is by and large already aware of how
difficult overall conditions are due to the multi-dimensional
crisis that has gripped the nation since 1997 and how painful the
reform measures needed to resolve the crisis are. A steady dose
of good, honest communications with the people would be effective
to maintain such awareness and understanding.

But such an understanding would not automatically lead to a
willingness to put up with additional sacrifices, if the
government does not show strong leadership, a high sense of
crisis and a high sense of urgency in coping with the crisis and
was not able to convince the public that the burdens are
equitably shared between the different groups of the people.