Sunday 28 March 2010   

INDONESIA: Poor hit hard as fuel prices rise 


      Photo: Ahmad Pathoni/IRIN  
      Many taxi drivers in Jakarta have had to absorb the 30 percent jump in 
petrol prices. Most rent their cars and while they are paying more at the 
pumps, their employers have not raised fares or compensated drivers 

JAKARTA, 28 July 2008 (IRIN) - These days taxi driver Rusdi often earns little 
more than 50,000 rupiah (US$5.50) for driving a 17-hour shift through Jakarta's 
congested traffic. The increased cost of petrol is stealing a large chunk of 
his income. 

The Indonesian government decided in May to raise fuel prices by 30 percent, 
forcing Rusdi to spend significantly more on petrol, but the taxi company for 
which he works has neither increased fares nor reduced his daily fee to drive 
the taxi. 

"My company doesn't care about our problems," he told IRIN. "Now we're the ones 
who have to subsidise fuel for the company." The additional charges for petrol, 
plus the costs of repairs and the daily cab rental fee, are forcing taxi 
drivers like Rusdi to work longer and longer hours. 

When the government raised fuel prices, the move sparked protests throughout 
the country where millions of poor people were already hit by rising food 
prices. An increase in fuel costs means higher prices of essential commodities 
and transport. 

As a result, the number of poor people in Indonesia is expected to reach 41 
million from 37 million last year, said Latif Adam, an economist at the 
Indonesian Institute of Sciences. 

"Obviously with the rising [consumer] prices that followed the fuel price hike, 
people who were in the near-poor category have become poor," he told IRIN. 

The government sought to soften the blow with monthly cash handouts of 100,000 
rupiah (about $11) to the poorest Indonesians until the end of the year, but 
Adam said the rising prices of basic commodities meant the initiative would 
have little effect in reducing the poverty rate. Nearly half the population of 
220 million people lives on less than $2 a day. 

Inflationary pressures 

The National Bureau of Statistics said on 1 July that annual inflation rose to 
a 21-month high of 11.03 percent in June. But Indonesian Finance Minister Sri 
Mulyani said the inflationary pressure was temporary. 

My company doesn't care about our problems. Now we're the ones who have to 
subsidise fuel for the company. 
"We expect it to happen two or three months after the fuel price hike, but 
after that the level will be normal again," she told reporters on 1 July. 

But for Karya, who sells fried food on the street outside an upscale Jakarta 
mall, that is small comfort: "Everything has become more expensive, including 
cooking oil and flour." After the government raised fuel prices, his income 
dropped by about 50 percent. In the past, he would earn 200,000 rupiah ($20) on 
a good day. 

The fuel price hike has taken a toll on the popularity of President Susilo 
Bambang Yudhoyono. A survey released on 29 June by a private agency, Indo 
Barometer, showed Yudhoyono's popularity rating down to 36.5 percent from 55.6 
percent in its last survey in December 2007. The poll also found that if 
elections were held now, more Indonesians said they would vote for former 
President Megawati Sukarnoputri. 

A hefty fuel price increase in 1998 at the height of the regional financial 
crisis contributed to protests so widespread that they forced then-president 
Suharto to resign. 

Yudhoyono has not said publicly if he would seek re-election in the 2009 poll 
but it is widely expected that he will. 

Street vendor Karya said he did not care about who was going to be elected 
president. "Whoever the president is, is the same. Little people like us will 
always suffer," he said. 


Theme(s): (IRIN) Economy 

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