Indonesia hikes fuel prices by 30pc
Long queues formed at petrol stations ahead of the announcement late Friday that prices would rise by an average 28.7 per cent from midnight due to record oil costs that have sucked state money out of social programmes.
“Considering the rising global fuel price and the heavy burden of subsidies on the budget, we have decided to raise the fuel price,” energy minister Purnomo Yusgiantoro said.
Many ordinary Indonesians say higher fuel prices combined with the recent surge in the cost of food will put an intolerable strain on family budgets.
The price hike sparked protests across the sprawling archipelago of 234 million people when it was flagged earlier this month by President Susilo Bambang Yudhoyono.
The ex-general had promised not to raise fuel costs until after elections next year, but with oil prices smashing records above 130 dollars a barrel this week the government felt it had no choice but slash subsidies.
Indonesian motorists are now paying 33.33 per cent more to fill their tanks with premium gasoline at 6,000 rupiah (65 cents) a litre, while diesel fuel for transportation has leapt 27.9 per cent to 5,500 rupiah.
Analysts, however, welcomed the rises and said other Asian counties would have to follow suit or watch their subsidies explode along with international oil prices.
“I think this move is positive for Indonesia in terms of its fiscal position,” said Royal Bank of Scotland economist Euben Paracuelles in Singapore.
“It looks like that’s where most governments are heading right now.”
Taiwan’s new government has decided to end a freeze on domestic gasoline prices from June, while Malaysia is reportedly looking at making wealthy consumers pay more for fuel under a new two-tier subsidy system.
To soften the blow for the millions of Indonesians living on less than two dollars a day, Jakarta has outlined plans for direct cash transfers to the poor amounting to 14.1 trillion rupiah.—AFP