By Andi Abdussalam
Jakarta, Jan 10 (ANTARA) - The government's signal over the weekend to cut subsidized premium gasoline and diesel oil prices in the middle of this month has raised public hope for increased purchasing power and lower commodity prices and transportation fares.
Yet, concerns also prevail. Despite another cut, prices of goods would remain unchanged as it was shown when the government lowered fuel oil prices twice in December last year.
It could even turn worse, if the government were forced to lift the gasoline and diesel oil prices again due to unexpected crude price rebound in the world market. It would surely drive up prices of goods and transport fares.
In such a case, the government's efforts to alleviate the people's burden and increase their purchasing power by cutting fuel oil prices amid the impact of the world economic crisis will fail.
"It would not be enough for the government to cut fuel oil prices only, and then let the market mechanism decide (lower) prices. It should have a clear scheme to lower commodity prices," Farid Wajdi, director of Consumer Protection and Advocacy Institute (LAPK), said.
He said that the government had lowered fuel oil prices two times but it had not yet affected the lowering of commodity prices, such as the prices of basic necessaries.
The fact that fuel oil price cuts have not yet helped lower prices in the market prompted the government to discuss the matter on Friday.
President Susilo Bambang Yudhoyono, who chaired the cabinet meeting, has earlier said he would study the effect the diesel oil price cuts on the real sector. He expressed concern as the fuel oil price cuts seemed to be unsuccessful in driving down the prices of basic necessaries and transport fares.
The government in December last year cut the premium gasoline price two times by Rp500 from Rp6,000 per liter to Rp5,000 per liter and diesel oil price from Rp5,500 per liter to Rp4,800 per liter.
During the meeting on Friday, which was also attended by chairman of the Indonesian Chamber of Commerce and Industry (Kadin) MS Hidayat, the head of state asked the business community to be fair with regard to basic necessary prices and transport fares in light of the domestic fuel oil price cuts.
"The president asked the business community to be just and fair to the people by lowering the prices of basic necessaries and transport fares," Finance Minister Sri Mulyani said after the meeting.
The president at the meeting asked Kadin chief MS Hidayat to seriously consider oil price reduction and reflect it in the prices of its products. Oil price cuts should obviously have reduced the business community's production costs.
Mulyani said all parties, the business community in particular, should be transparent and serious in helping realize the government's desire to have the basic necessary prices and transport fares in the country lowered.
"The government has lowered domestic fuel oil prices and the business community should have reduced the prices of other commodities accordingly without any excuse," Sri Mulyani said.
According to MS Hidayat, commodity prices could be lowered by 10 percent if the government cut further the oil prices by Rp500. He said that if the Kadin proposal was accepted and the fuel oil prices were lowered, then there would be possibilities for the prices of a number of necessaries and transportation fares to go down by about 10 percent.
"I have no authority to say that the government is going to announce the price decrease but if I look at its 'body language' it is likely that the government will accept Kadin's proposal," Hidayat said after attending the meeting adding that the government would likely announce it on January 15, 2009.
Kadin was proposing that the government cut the prices of subsidized premium gasoline and diesel oil to Rp4,500 per liter and Rp4,300 per liter respectively.
Vice President Jusuf Kalla indicated the government would announce another cut in domestic fuel oil prices but he did not mention any figures.
"God willing, the prices will be lowered again on January 15. The government is committed to alleviating the people's burden in line with the current world crude price," the vice president told a press conference.
Hidayat said that a cut by about Rp500 per liter of the fuel oil prices followed by the lowering of transportation fares would help maintain or even increase the people's purchasing power in the current economic crisis.
In the meantime, Transportation Minister Jusman Syafii Djamal said public transport fares were expected to go down by 10 percent if the government lowered fuel oil prices in the middle of this month.
"Transport fares have previously been lowered by about 3 to 6 percent following cuts in premium gasoline and diesel oil prices in mid December last year. If the oil prices are lowered again, transport fares can be cut father by about 10 percent," the minister said.
He said President Yudhoyono had asked him about the possibility of lowering transport fares if the government lowered gasoline and diesel oil prices.
Therefore, the minister called on public transport owners to lower their fares soon after the government cut further fuel oil prices. "State-owned transportation firms such as the DAMRI for buses, ASDP for ferries, and PT KA for trains have to pioneer the lowering of transport fares," the minister said.
So far, fares for economy class inter-city buses could easily be lowered but the fares for city mini buses (angkot) are difficult to lower because of the drivers' errant attitudes.
"The drivers directly feel the impact of increasing prices of spareparts such as tires in Indonesia which are relatively higher than those overseas," the minister said.
The government and relevant vehicle owners associations are trying to find a way to provide incentives for lower prices of automotive spareparts, including tires. (T.A014/HNG/A/E002) 11-01-2009 21:38:19
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