Jakarta on alert as protests mount over fuel subsidy cuts

Updated On: Sep 30, 2005

Jakarta – The Yudhoyono government is bracing itself for stormy days ahead as protests mount over a plan for a massive cut in fuel subsidies, which will lead to a sharp rise in the prices of petrol and kerosene. The authorities on Sept 28 deployed a 5,000-strong security force in Jakarta to safeguard petrol kiosks, shopping malls and government buildings after the House of Representatives voted to support the cuts in subsidies, which have sucked up a third of the state budget. 

     President Susilo Bambang Yudhoyono, in line with his image as a democrat, said he understands why people are challenging the government's plan to increase domestic oil prices from Oct 1, and he respects the differences of opinion.
     "Feel free to take to the streets and express your aspirations in an orderly manner, without torching, occupying or vandalising anything. That's democracy,"  he said on Sept 28.  
     Mr Yudhoyono and his Cabinet are aware that they are dealing with a politically explosive issue. An increase in 1998 triggered riots which quickened the collapse of the Suharto regime. Three years ago, protests also forced Mr Yudhoyono's predecessor, Ms Megawati Sukarnoputri, to scale back an increase in fuel prices. The price rises this time round also come at a sensitive time, ahead of the Muslim fasting month of Ramadan. 
     To soften the blow to the poorest Indonesians, the government has promised a cash grant of 300,00 rupiah every three months to almost 16 million families. But the scheme, due to start on Oct 1, has already sparked complaints of bureaucratic bungling, ranging from allegations that many families are not getting their eligibility cards to an underestimation of the number of those who need the cash. 
     In an editorial, The Jakarta Post cautioned that the expected massive street demonstrations, if not well managed "could cause a social and political backlash at the expense of macroeconomic stability and set off  'panic rises' in the  prices of goods".
     "However, protest rallies would be short-lived if the government goes all out to ensure a smooth phasing-in of the new fuel price policy without an excessive inflationary impact on the economy."
     According to the Post, among the steps that the government must take is to ensure that the 4.8 trillion rupiah in compensation funds reach their targeted 62 million people. The government also needs to offer bus and trucking companies some fiscal incentives so that they will increase their fares only in proportion to the fuel-price hikes. 
     To  university students who are planning to lead protests against the price hikes, the Post said they should realise that "price subsidies are actually a future tax that should be borne by the next generation".
     "Are the young generation willing to inherit a bankrupt economy?"

* SBY warns against fuelling violence (The Jakarta Post, Sept 29)

* Political consensus on fuel (The Jakarta Post, Sept 29)

* 5,000-strong force guards key venues (The Straits Times, Sept 29)