TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Parties get behind oil price hike

Major political parties are throwing their support behind the government's unpopular plan to raise fuel prices early next month

Abdul Khalik (The Jakarta Post)
Jakarta
Sun, May 11, 2008

Share This Article

Change Size

Parties get behind oil price hike

Major political parties are throwing their support behind the government's unpopular plan to raise fuel prices early next month.

The United Development Party (PPP), the third-largest faction in the House of Representatives, is the latest party to publicly declare its support for the controversial policy.

PPP chairman Suryadharma Ali said Saturday his party understood why the government had to increase fuel prices given the skyrocketing global price of oil.

"The oil price surge has placed a huge burden on the state budget because of much higher subsidies.

"We can no longer avoid the issue and maintain the current oil price just to win popularity," Suryadharma, the state minister for small and medium enterprises and cooperatives, told a news conference during the party's national meeting in Jakarta.

Other major political groups backing the plan include Vice President Jusuf Kalla's Golkar Party, President Susilo Bambang Yudhoyono's Democratic Party, the National Mandate Party (PAN) and the Prosperous Justice Party (PKS).

Strong opposition has come only from the Indonesian Democratic Party of Struggle (PDI-P), the party chaired by former president Megawati Soekarnoputri.

"The government should find other alternatives before raising fuel prices," PDI-P lawmaker Ganjar Pranowo said.

"This proposal breaks Yudhoyono's own political promise (made after he increased fuel prices in 2005)."

Gaining the support of most major parties will clear the way for the Yudhoyono administration to go ahead with the plan.

The government announced its plan to increase fuel prices to an "affordable" level earlier this month, to allow cuts to burgeoning fuel subsidies, which threaten the sustainability of the state budget.

With global oil prices hovering at more than US$120 a barrel, Yudhoyono has faced intense pressure from businesses and economic ministers to cut the subsidies that keep the domestic prices of gasoline, diesel fuel and kerosene below international market levels.

The government earmarked about 12 percent of this year's total national budget, or about Rp 987.48 trillion (US$107 billion), for fuel subsidies.

Analysts have warned uncertainty about fiscal sustainability will harm overseas lending and foreign direct investment and thus weaken the national economy.

Funds for infrastructure development, education and health are also likely to be slashed as spending on subsidies continues to overwhelm the state budget.

Vice President Jusuf Kalla said recently fuel prices would not be increased by more than 30 percent.

Golkar lawmaker Harry Azhar Azis, who has played a key role in the oil price hike policy, said prices would be increased by an average of 28.7 percent.

Observers have said Yudhoyono would need strong political support from the House to minimize the political fallout from the policy and head off widespread public demonstrations.

Lukman Hakim Saifuddin, the PPP faction chairman at the House, said his party's 58 House members would support the fuel increase provided the government compensated low-income earners to offset the impact of the decision.

"We demand a government guarantee to invest more in improving people's incomes to boost their capacity to buy basic commodities and pay for health care and education," he said.

The government must also initiate labor-intensive projects that create employment for low-income earners, Lukman said.

In voicing support for the plan, PKS lawmaker Mutammimul Ula said the fuel price hike was unavoidable.

"The House has not come up with any better alternatives so we have no choice but to increase the prices," he said.

PAN legislator Djoko Susilo said his party supported a fuel price hike as a last resort only.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.