JAKARTA: Indonesian President Susilo Bambang Yudhoyono’s policies on petrol prices and porn are unlikely bedfellows, but may win him the support of the masses and minority hardline Muslim fringe in next year’s elections.Yudhoyono, a reformist ex-general, announced on Sunday surprise cuts in gasoline and diesel prices, of 9 and 13 per cent respectively, to take effect on Monday, just two weeks after an eight per cent reduction in fuel prices.
Last month the president, known by his initials S.B.Y., approved an anti-porn law that had been pushed by the Islamist parties. The law was vigorously opposed by Christian and Hindu minorities as well as some Muslims, who regard it as a sign of creeping religious and cultural intolerance.
“He’s got his eye on elections next year,” said John Virgoe, Southeast Asia project director of International Crisis Group.
“Fuel price cuts are seriously popular, and with elections coming up it’s entirely understandable. All Indonesians are in favour of fuel price cuts.”
By contrast, the anti-porn law “is pandering to a very small section of Indonesian society. S.B.Y., as well as politicians, is unable to stand up to the hardline groups. He was worried about getting criticised if he didn’t sign it.”Yudhoyono, who won Indonesia’s first direct presidential elections in 2004 on promises to tackle graft, boost economic growth and create jobs, has said he will stand for re-election in the presidential polls next year.
But to be eligible to run, his tiny Democrat Party needs to win a quarter of the votes or a fifth of the seats in the April parliamentary elections, which means he may need the support of other parties, including Golkar, former president Suharto’s party, or some of the smaller Islamist parties.
His party has the support of between 17 and 19 per cent of those surveyed, according to recent opinion polls.
Averting crisis
Yudhoyono has delivered on some of his promises.
The anti-graft authorities have made significant progress in taking on those suspected of corruption, including a relative by marriage of Yudhoyono’s oldest son.
The economy expanded 6.3 per cent last year, its fastest pace in a decade, on the back of a commodity boom.
Rising energy prices put considerable pressure on the state budget in a country where fuel prices are heavily subsidised and politically sensitive: fuel price hikes in the past have triggered social unrest, political and economic chaos.
Now, that steady economic expansion of over six per cent a year is under threat because of the fall-out of a global financial crisis and credit crunch.
The fuel price cuts Yudhoyono announced on Sunday should reduce costs for industry as well as for millions of Indonesians, whose living costs have surged due to higher fuel prices and the knock-on effect on food and other goods.
“There are growth concerns in Indonesia,” says Robert Prior-Wandesforde, senior Asian economist at HSBC in Singapore.
“Indonesia is not the only country cutting fuel prices. Malaysia and India, countries that operate subsidy schemes, are doing it, and I think there are reasonable grounds for doing it, not least because of growth concerns. It’s another means to try and promote its economy.”
Not everyone agrees.
James Bryson, fund manager at HB Capital Indonesia which invests in Southeast Asia’s biggest economy, said Indonesia has missed an opportunity to steadily eliminate costly subsidies and allow energy prices to reflect the market price.
Such a move would allow the government to use the money saved for other vote-winning measures including health, education, poverty alleviation or infrastructure.—Reuters
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