OPPOSITION TO FUEL OIL PRICE HIKE INCREASING

By Andi Abdussalam

Jakarta, March 12 (ANTARA) - The government's plan to raise the price of subsidized fuel oil early next month continues to be opposed by sections of society, including mass organizations and certain political parties.          They say the price increase will only create a financial burden and hardship for the people, increase the number of the poor, boost inflation and violate the law on the state budget.          The government is planning to raise the price of subsidized fuel oil on April 1. It has proposed two options to the House of Representatives (DPR). In the first, the government proposes to raise the price of subsidized premium gasoline from Rp4,500 to Rp6,000 per liter and diesel oil from Rp4,500 to Rp6,000 per liter.          In the second option, the government provides a fixed subsidy of Rp2,000 per liter for both types of fuel oil. It will also provide compensation for the poor, who are likely be affected by the increase in prices.          With the increase in the fuel oil prices, the government hopes to save trillions of rupiah that have so far burdened the state budget.         "The government is afraid of deficit in the state budget but it does not take into account the increasing risks that poor people will suffer," Yogyakarta Labor Alliance (ABY) Secretary General Kirnadi said.          Kirnadi said that if the government intended to save up to Rp35 trillion or even Rp57 trillion by reducing subsidies, it could just cover it from the 3 percent unspent budget from 2011 amounting to Rp36 trillion plus Rp22 trillion from the ministry/government institutions efficiency programs.         He added that the government should also have taken alternative steps such as raising tax ratio or royalty from mining firms. In reality, it has adversely placed the burden on the country's poor.         The ABY secretary general said it was normal practice abroad to raise tax ratio for example, by 14 percent of the gross domestic product. This means that if the government took this step, it could earn a total of Rp1.036 trillion.         "As raising the tax ratio would threaten the interests of the rich in this country, it seems that the government pays more attention to the rich rather than the poor. Therefore, the ABY rejects the government's plan to raise fuel oil prices," he said.          The rejection was also raised by politician Abdul Hakim of the Prosperous Justice Party (PKS). He believes that the government's plan to raise the prices will only increase the number of poor.          "The government has violated the regulation stipulated in the state budget. It should first amend the regulation if it wishes to raise the subsidized fuel oil price," Hakim noted.          "Actually, more intensive discussions should be held before implementing such policies," the PKS politician added.          Legislator Ahmad Muzani, faction secretary of the Greater Indonesia Movement (Gerindra) shared Hakim's view, saying his party has rejected the government's plan because the measure will cause hardships to the people.          He said that besides causing hardships, an increase of Rp1,500-Rp2,000 in the present fuel oil price would result in a 2.73 percent rise in the inflation rate and result in a great financial burden for the poor.          According to Kirnadi of ABY, the assumed 6 to 7 percent inflation could be more than that because the fuel price hike would have a wider impact on other costs such as electricity tariffs, food, transportation and so on.         "In 2008, the 28.75 percent price increase of fuel oils boosted inflation by 11.01 percent. The plan to raise fuel by Rp1,000 per liter could boost the inflation rate to 22.22 percent and to 33.33 percent if the price is raised by Rp1,500 per liter," he said.          This means that inflation could reach 11 percent weakening the purchasing power of the people, he said.          Moreover, according to Ahmad Muzani, increasing the fuel oil price would also be a violation of Law No 22/2011 of the State Budget, which clearly forbids any increase in the fuel oil retail price.               Another Gerindra faction member, Sadar Subagyo, said the government had never tried to find a lasting solution to the country's fuel oil problem.         "What has never been disclosed is the fact that the cost of maintaining the bureaucracy including paying its salaries and other needs has soared by 400 percent, from Rp187 trillion in 2005 to Rp 733 trillion in 2012. What the bureaucracy has been doing so far is just fattening itself," Sadar said.          Therefore, Indonesia's largest Muslim organization Nahdhatul Ulama (NU) hopes that the government would raise fuel oil prices only as the last resort. "If possible, the government should not raise the price of fuel oil because it will burden the people," NU Central Board Chairman Said Aqil Siroj said.          He added that the government should also account for its decision. "If the government is forced to do it because subsidies continue to burden the state budget, then it can increase the price but only as the last resort," Siroj said.          The country's economic conditions will remain stable even if the government raises subsidized fuel oil prices, according to economic observer Prof. Dr. Didik Susetyo of South Sumatra-based  University of Sriwijaya.          Dr. Susetyo remarked that the fuel oil price hike would not significantly affect the people's purchasing power. "I think basic necessity prices will increase by five to ten percent and transportation cost by about 25 percent," he said.          He added that the prices were still within the financial reach of the people as the economy has relatively improved. The people's purchasing power would be affected due to commodity price hikes but only slightly. He suggested that the price should only be increased by Rp1,000 per liter. "A Rp1,000 per liter increase is enough," he added.          Meanwhile, ruling Democrat Party (PD) is optimistic that its plan to raise fuel prices would be supported by factions in the House.          "All factions of the parties in the coalition have expressed their support for the government's plan except the PKS (Prosperous Justice Party)," Democrat Party faction chairman Mohammad Jafar Hafsah said.          Jafar Hafsah added that other party members of the ruling coalition, namely Golkar Party, the National Mandate Party (PAN), the United Development Party (PPP), and the National Awakening Party (PKB), stood by the decision of the government to raise the oil price as long as it was accompanied by compensation for the poor.***1*** (T.A014/INE/O001) 12-03-2012 15:20:3