http://www.theage.com.au/news/world/jakarta-faces-backlash-over-big-fuel-rise/2008/05/15/1210765056652.html
Jakarta faces backlash over big fuel rise Mark Forbes May 16, 2008 THE Indonesian Government is offering cash handouts of more than $A1.6 billion to its poorest families in the hope of reducing a violent political backlash against a fuel price rise of up to 30%. The soaring world oil price is forcing President Susilo Bambang Yudhoyono to cut large subsidies that make Indonesia's petrol and kerosene prices the region's lowest, but eat up about 12% of the budget. The price rises are likely to be announced next week, but the Yudhoyono administration is attempting to head off growing unrest, with political opponents already condemning the move. Police fired tear gas yesterday at rock-throwing students protesting against the price hikes in Makassar, the capital of South Sulawesi province, local television said. Fuel prices have always been politically sensitive in Indonesia. Ten years ago this month an attempt to cut fuel subsidies provoked demonstrations that led to the resignation of President Suharto. President Megawati Sukarnoputri abandoned similar plans after violent protests in 1994. Dr Yudhoyono has been dogged by protesters this week and analysts believe the move may harm his chances of re-election in next year's presidential poll. He promised not to raise prices before 2009 when introducing a cut to subsidies. Welfare Minister Aburizal Bakrie yesterday said Dr Yudhoyono had demanded the cash assistance program be well implemented, warning officials against hindering the flow of funds to recipients. About 19 million households would begin receiving payments of more than $A11 a month from June, he said. In March, the Government estimated fuel subsidies would cost it nearly $A15 billion in 2008, assuming an oil price of $US95 a barrel - at present it is about $US125. A 30% price rise would increase the cost of petrol in Indonesia to 70 cents a litre. Jockeying for position in next year's elections, some of Dr Yudhoyono's coalition partners, including the Islamic-oriented Prosperous Justice Party and the National Mandate Party, have opposed the price rise. Vice-President Jusuf Kalla is trying to ensure his Golkar Party, the largest member of the coalition, supports the move. On television chat shows he has pointed out that the main beneficiaries of subsidies were the car-owning rich. The large, hardline Muslim group Hizbut Tahrir has already sounded a warning. "Fuel price hikes will only increase the number of poor people in the country," said leader Muhammad Ismail Yusanto.
