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Indonesian lawmakers warn gov't on impact of fuel price hike to poor people

03-01-2012 14:40 BJT

JAKARTA, March 1 (Xinhua) -- Indonesian parliament members warned the government on the impacts that would be suffered by poor people if price of subsidized fuel is raised, a local media reported on Thursday.

Priyo Budi Santoso, deputy speaker of the House of Representatives, said on Wednesday that the government's inability to commit to a firm policy was a sign that it was not prepared for the price increase or the fallout, specifically an expected rise in the price of basic commodities. "Every time fuel or electricity prices rise, the price of food and other basic goods rise sharply," said Priyo, a member of the Golkar Party. "We want the government to be prepared for that so that it can be handled properly. "If the government is hesitant, it shouldn't go ahead with the price hike," he was quoted by the Jakarta Globe as saying.

Anis Matta, the House deputy speaker from the Prosperous Justice Party (PKS), said his party was against the increase, and called on the government to find a "wiser" solution to lessen the strain of the subsidy on the state budget. "The PKS sees this as a problem with the government's fiscal management," he said.

Anis suggested that the government try to cut costs in other areas, like stemming budget losses at ministries and cutting back on other subsidies. "There's actually a lot that can be done in terms of messing around with other subsidies," Anis said.

The opposition Indonesian Democratic Party of Struggle (PDI-P) agreed that cost savings could be made elsewhere in to maintain the subsidy.

Daryatmo Mardianto, the PDI-P chairman of the House, said the fuel subsidy had actually decreased over the years, from 18.8 percent of the state budget in 2005 to 8.7 percent this year. The subsidy this year is 123.6 trillion rupiah (about 13.8 billion US dollars), out of the state budget of 1,418.5 trillion rupiah. "To claim that the subsidy is a drain is inaccurate, because it has actually been going down," he said.

Instead, he pointed to civil servants' salaries and overhead, which stand at 51.4 percent of the state budget this year, as the areas to cut costs.

The PDI-P said raising fuel prices would hurt low-income Indonesians the most.

Daryatmo said that according to World Bank data, 98.6 percent of those who used subsidized fuel earned less than 5.6 million rupiah (about 615 US dollars) a month, with 41.8 percent making less than 1.9 million rupiah. "For the government to claim that the subsidy isn't benefitting those who need it is simply wrong," he said. "The official data clearly shows that subsidized fuel is used mostly by those with lower incomes."

The government had said it will allocate up to 40 trillion rupiah (about 4.3 billion US dollars) in compensation to help low- income families cope with the higher fuel prices. "The total amount of compensation will be between 30 and 40 trillion rupiah, but I don't know the exact figure yet," Social Affairs Minister Salim Segaf Al Jufri said on Tuesday.

He said most of the money would come from savings and increased efficiency in all government ministries and institutions.

Energy Minister Jero Wacik outlined two options for the hike, set to take effect on April 1.

The first would be to raise the price of subsidized gasoline and diesel by 1,500 rupiah (about 0.16 US dollars) per liter, while the second option would be to keep a fixed subsidy of 2,000 rupiah (about 0.21 US dollars) per liter on the two fuels. The existing price of subsidized fuel is set at 4,500 rupiah (about 0. 49 US dollars).

The Jakarta City Council warned that the local administration needed to deal with the impact, including a threat by the Organization of Land Transportation Owners (Organda) to raise public transit fares 25 percent to 30 percent.

Editor:Zhang Jianfeng |Source: Xinhua

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