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
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
"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
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.
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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