JAKARTA - Police used tear gas on about
100 rioting students during one protest over the
government's decision to more than double the
average cost of fuel.
That protest was
just one of many over the weekend when thousands
took to the streets. Some burned tires and threw
rocks at police while others waved placards
denouncing the government, which maintains the
fuel increases are aimed at staving off an
economic crisis brought on by mounting external
debt.
"Another corrupt government, another
fuel price hike," said a placard waved Saturday by
a demonstrator on the capital's streets. That and
similar placards were reflective of popular
opinion that the price
hikes were somehow linked to various
irregularities on the part of the government,
including the recent discovery that petroleum was
being smuggled out of the country.
It was
the third day of protests against the fuel
increases as angry Indonesians anticipated the
increases. The demonstrations failed to sway the
government, which, after a three-hour cabinet
meeting on Saturday, announced that gasoline would
immediately rise to $1.71 a gallon. The average
cost of domestic fuel went up by close to 125%.
Worst hit was the price of kerosene, used mainly
by the poor as cooking fuel and on which there was
a rise of 185%.
The higher gas prices will
in turn push up the price of everything from rice
to fish and cigarettes on the archipelago with a
population of 220 million people, half of whom
live on less than $2 a day.
The government
promised an interim subsidy of US$29 that is
supposed to help 15 million households subsisting
on incomes of less than $17 a month. (The
government's penchant for subsidizing fuel was
expected to cost $14 billion this year.)
Minister for Mines and Energy Purnomo
Yusgiantoro said there would be no further price
hikes this year, adding there was a possibility of
prices going down if international prices went
down. "There should be no more price rise until
the end of the year," the official Antara news
agency quoted him as saying on Saturday.
But the government promises did not
satisfy protestors in several Indonesian cities
because the hikes were larger than expected. With
petrol prices going up by 87% and diesel costs
doubling, there were fears of a cascading effect
on the prices of goods that are dependent on
transport.
It was not just the
demonstrators on the streets, but consumer
activists and well-respected economists believe
the country could have managed its petroleum
resources better and more honestly without
burdening ordinary people by lifting subsidies.
"Without strong commitment and real action
in combating corruption, lifting subsidies is not
going to improve the economic situation," said
Indah Sukmaningsih, of the Indonesian Consumers
Foundation (YLKI).
Indonesia has
consistently been rated by watchdog groups such as
the German-based Transparency International as
among the most corrupt nations in the world.
Fadhil Hasan, an economist at the
Institute for Development Economics and Finance
(INDEF), has similar views but he preferred to
dwell on the question of better management in
Indonesia, a member of the Organization of
Petroleum Exporting Countries.
"Increases
in the price of oil have always been followed by
rising prices of basic necessities. And now we are
facing the holy month of Ramadan and Idul Fitr
festivities when prices of basic items soar," he
said.
Hasan said hiking oil prices was not
the only way of reducing the 2005 budget deficit.
Making strict efficiencies in state-spending from
the highest to the lowest level of government
administration would, he said, actually be more
effective.
"And if [the government] aimed
to prop up the falling rupiah, they are supposed
to increase exportation and draw foreign
investment," Hasan said.
YLKI and INDEF
had separately demanded that the government
postpone the new prices until early next year.
Already in March, prices had been raised by an
average of 29%. The anger of ordinary people has
been growing not only because of the announced
hikes and the reports of petroleum smuggling but
also because of hoarding of fuel stocks by dealers
out to make a fast buck.
People queuing up
for kerosene were seen in greater Jakarta,
Bandung, Makassar and Medan, with many returning
home disappointed.
"Foul-minded
businessmen made use of this situation because
they can earn a huge profit. They buy at the
present low price, then release to the market at
the new price. Smart but immoral," said Baihaqi, a
Bogor resident.
"Lifting subsidy on oil is
unavoidable because we have a huge budget deficit
[of about $46 billion]," Vice President Yusuf
Kalla said.
Indonesia's obligation to
repay its external debt, now recorded at $75
billion, adding to its $65 billion in domestic
debt, has caused a massive budget deficit. More
than half of the budget allocation is used for
external debt servicing.
The scarcity of
kerosene and diesel is at least partly caused by
the huge scale of fuel smuggling out of the
country, involving officials of Pertamina, the
state oil corporation, and police officers.
Police found that Pertamina workers in the
Lawe-Lawe oil refinery in East Kalimantan had
pumped crude oil to Singaporean tankers offshore.
The crude oil was allegedly sold at $35 a barrel,
while international prices were more than twice
that figure.
Fuel prices are a sensitive
issue in Indonesia. Former president Suharto faced
an uprising which saw his ouster in 1998, after he
raised fuel prices in the middle of a serious
economic crisis. In 2002, former president
Megawati Sukarnoputri was compelled to roll back a
fuel price hike that she had ordered.
