Utility hike won't increase poor population

The Jakarta Post, Jakarta

The recent utility price hikes policy should not inflate the number of the country's poor this year, because the government was providing a welfare program and fiscal stimulus policy, chief of the Central Statistics Agency (BPS) Soedarti Surbaki said on Friday.

"If the government was to do nothing, then the number of poor people will increase. But in this case, the government has taken some measures," she said, and added that the various planned measures should raise the income of poor people by around 10 percent.

She said that there were around 3.8 million people currently living in poverty, representing some 18 percent of the country's 210 million population.

The government earlier this month raised fuel prices, electricity tariffs, and telephone charges in a bid to cut down expensive subsidies and to help the ailing state-owned utilities firms.

Critics have said that the simultaneous increase in the utility prices amid the current weak purchasing power of the people would cause prices to soar and thus increase the number of the poor population, while overly burdened companies would lay off some of their workers.

But the government has taken a number countermeasures to minimize the impact of the price hikes on low-income people and small businesses.

The government has allocated some Rp 4.4 trillion in a welfare program, which includes provisions of cheap rice and subsidies for education and health care. A fiscal stimulus policy which includes tax break facilities for businesses has also been announced.

BPS defines "poor people" as those whose caloric intake is less than 2,100 kilocalories per day, or those who make an income of less than Rp 90,000 per month for those living in cities and less than Rp 70,000-Rp 80,000 per month for those living in villages.

Some analysts earlier said that although the utility price hikes would not increase the number of poor people here, the policy would prevent the government from reaching its target of decreasing poverty rates to around 15 percent of the population this year.

They also pointed out that the price hikes would slow down this year's economic growth and push up inflation, both of which would create additional pressure on low-income families.