GOVT TRIES TO MITIGATE IMPACTS OF FUEL PRICE HIKE ON POOR by Fardah

   Jakarta, Nov 26, 2014 (Antara) -- The administration of President Joko "Jokowi" Widodo has been trying to convince the public that the recent move to hike the prices of fuels by Rp2,000 per liter will eventually help improve their welfare.

         When announcing the price hike on November 17, the president stated that the large amount of funds that were allocated for fuel oil subsidy could be diverted to aid farmers by providing them with irrigation facilities, seeds, and fertilizers, or to help fishermen by providing them with fishing boats, machines, and cold storage units.

         He believed that diverting the subsidies to those productive sectors was necessary for the welfare of all people, the poor and the rich alike.      

    The government has increased the price of premium gasoline from Rp6,500 to Rp8,500 per liter and that of diesel from Rp5,500 to Rp7,500 per liter.

         To compensate the poor whose purchasing power has been affected by the fuel price hike, the government has been paying Rp200 thousand per month to every poor household from November 18 and will continue to do so till December 2.

         Apart from providing Prosperous Family Cards, the government is also compensating the poor by giving them Indonesia Health Cards and Indonesia Smart Cards.

         "The move is aimed at maintaining the purchasing power of the public and encouraging them to undertake business endeavors in productive sectors," Jokowi explained.

         The fuel price hike would have created six million more poor people if the government failed to intervene, according to Social Affairs Minister Khofifah Indar Parawansa.

         The Riau chapter of the Indonesian Consumer Protection Foundation (YLKI), moreover, regretted the government's decision to raise the fuel prices that has led to a surge in the prices of other goods.

         The fuel price increase will weaken the purchasing power of the public, particularly those belonging to the middle and lower classes, Riau YLKI Director Sukardi Ali Zahar said in Pekanbaru, Riau, recently.

         "This situation will be a disadvantage for those engaged in the sectors of industry and agriculture," he stated.

         "As we all know, even before the fuel price hike, the prices of basic commodities had already increased. It is possible that the traders will raise the prices again after the government officially announced the fuel price hike," he noted.

         Zahar believes that the fuel price hike will lead to a rise in inflation rate and weaken the purchasing power of the Indonesian people.

         Sharing a similar view, President of the Indonesian Labor Unions' Association (Aspek Indonesia) Mirah Sumirat said the recent fuel price hike has reduced the purchasing power of the people, including workers, by up to 50 percent.

         "This causes those who are almost poor to become poor," Sumirat said when heading a major rally in Jakarta, on Nov. 26, 2014.

         Therefore, Aspek Indonesia together with other elements such as workers, laborers, traders, farmers, fishermen, students, housewives, motorcycle taxi drivers will keep on expressing their objection to the price surge, she said.

         The Aspek Indonesia organized the rally to protest the price surge in front of the Parliament building and the manpower ministry on Nov. 26, 2014.

         She said the government has lied by saying that the fuel subsidy had been enjoyed by the rich people only. She also regretted that the government decided to raise the fuel prices while the world's fuel prices dropped.

        "So, the policy of the Jokowi-JK administration which has been in power for just two months, has hurt the feeling of the Indonesian people so much. The Jokowi-JK pair seem to have been held hostage by big capital interests so they are incapable of making policies which are pro-people," she said.

         She urged the government to reduce the fuel price hike and increase the minimum salaries of laborers.

         The labor union association plans to organize major rallies in 150 cities and districts in 20 provinces, to protest the fuel price surge in the near future.

         Meanwhile, in Maluku Province, a local lawmaker said poverty rate will increase as a result of the government's move.

         "The fuel price hike has triggered an increase in commodity prices and weakened the purchasing power of the people," Suhfi Madji, the chief of the Prosperous Justice Party (PKS) faction of the Maluku Legislative Assembly (DPRD), affirmed recently.

         He added that the increase in the prices of subsidized fuels would raise the number of poor people as commodity prices would soar.

         Recently, the Indonesian Traditional Fishermen Association (KNTI) complained that the price hike had also affected fishermen and fish pond owners.

         "Without ignoring the question of national energy management, the KNTI expresses regret over the government's lack of preparedness in anticipating the impact of the fuel price hike on fishermen's villages," Chief of the KNTI's Advisory Council, Riza Damanik, remarked recently.

         The government had better improve the fuel distribution system, weather information service, fishing locations, and the price of fish at fishermen's villages, he demanded.

         Furthermore, the move to increase the fuel prices was criticized by a legislator of the Democratic Party (PD), who stated that it was not the right time to raise the prices, given the declining world crude oil costs.

         The prices of world crude oil have already fallen to a much lower value than the US$105 per barrel assumed in the 2014 state budget, chairman of the PD faction in the House of Representatives (DPR), Edhi Baskoro Yudhoyono, said.

         The policy was not well grounded as the budget deficit and cash flow are safe, the son of former Indonesian president Susilo Bambang Yudhoyono, stated recently.

         The government had raised the cost of fuel only last year, and in early 2014, people were burdened with an increase in electricity tariff as well, he pointed out.

         "People will suffer as the policy will trigger increases in prices of all essential goods," he emphasized.

         Since the announcement of the fuel price hike, a number of rallies to protest the government's move have been organized by students, laborers, and farmers in many cities across the country.

         "It is feared that the public's trust in Jokowi will decline because in less than a month since being inaugurated as president, he has burdened the low-income community with the subsidized fuel price hikes," Karyono Wibowo, an observer at the Indonesian Public Institute, said recently.   
    Wibowo further noted that raising the fuel prices will have a huge impact on people's social and economic lives as energy is a vital commodity in their day-to-day activities.

         Therefore, the government should have postponed its decision to hike fuel prices, and instead, should have sought to resolve the budget deficit problem by optimizing the income tax sector, which can contribute hundreds of trillions of rupiah, according to the observer.

         The government could also seal the budget leak that had occurred in the country and optimize the expenditure of state revenue through state-owned enterprises, he added.

         "An audit of the oil and gas sector from upstream to downstream also needs to be done," the study team leader of the Trisakti Study Circle suggested.

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