Subsidized fuel rocketed will kill people and people will weight war Price of fuel in Indonesia may still be going up
Jakarta Globe - April 2, 2012
Agustiyanti, Rizky Amelia, Arientha Primanita & Ezra Sihite — Indonesia can increase the price of subsidized fuel as early as next month if the Indonesian Crude Price hits $135 per barrel in April, ministers said on Sunday.
The House of Representatives on Friday rejected the plan to raise the price of Premium subsidized fuel from Rp 4,500 to Rp 6,000 (50 cents to 65 cents) beginning on Sunday, but instead approved a conditional increase.
The revised state budget law passed in the early hours of Saturday states that the government can increase the fuel price if the average of the ICP in the previous six months is 15 percent above $105 per barrel, an assumption of the ICP set in the budget.
Both Finance Minister Agus Martowardojo and Coordinating Minister for the Economy Hatta Rajasa said on Sunday that the amendment means that government has the authority to go ahead with the 33 percent fuel price hike if the six-month ICP average goes beyond $120.75.
According to government data, the ICP in October stood at $109.25 per barrel, November at $112.94, December at $110.70, January at $115.90, February at $122.17 and March at $128. This means the current six-month ICP average stands $116.66 per barrel.
Deputy Minister for Energy and Mineral Resources Widjajono Partowidagdo said that according to his calculation, if April’s ICP rises above $135 per barrel, the six-month ICP average will go beyond $120.75. “This means we can directly increase the fuel price next month,” he said.
Widjajono explained that fluctuations in the ICP depended on circumstances in the Middle East, but that if there is no change in the current situation, the oil price will continue to rise.
The government had been fighting for the price increase to reduce subsidy spending on fuel, which ate up around $14 billion, or 11 percent, of the country’s state budget last year — more than what the government spent on education and health combined, which stood at $9 billion and $1.4 billion respectively.
The plan to reduce fuel subsidies and increase prices led to massive protests across the nation that turned violent in the run up to Friday’s plenary.
But when he addressed the nation on Saturday evening, President Susilo Bambang Yudhoyono said the government would only cut fuel subsidies after all other measures had been exhausted. “My view is that an increase in subsidized fuel price will be a last resort if there is no better way,” he said in his televised remarks.
The President said that although the oil price has been increasing since October last year, the government has been looking for alternative policies that did not directly increase the fuel price.
Hatta added that even if the average ICP passes the $120.75 mark, the government would still not automatically increase fuel prices. “We will try to find alternatives, such as calling on ministries and state institutions to cut expenses so that we can have budget savings to finance the subsidy,” he said.
However, oil and gas expert Kurtubi says that based on his estimates of how world oil prices fluctuate, a price hike next month was unlikely. “The government will increase the price by July 1, at the soonest,” said the Center for Petroleum and Energy Economic Studies expert.
Leave fuel subsidies alone as long as public is denied share of resources
Jakarta Globe - March 30, 2012
Will Hickey — Indonesia has a burgeoning population with an exponentially growing need for energy, but many still live hand to mouth. So as April 1 approaches, the issue of fuel subsidies has been highly contentious. What the controversy shows is that Indonesia has failed to use its vast oil and coal resources to lift the living standards of all its citizens.
The root cause of the problem has been a squandering of resources for short-term profits. This has been a consistent theme, such as exporting high-calorie thermal coal from Kalimantan to higher paying markets instead of selling back a lower quality coal under the domestic coal obligation to state utility company Perusahaan Listrik Negara.
Leaders in the government and ministries do not consider Indonesia’s resources to be owned by its citizens, but rather by themselves and foreign investors. For example, Freeport owns over 90 percent of its operation in Papua, with revenue last year of $2.3 billion, and BHP Billiton has a 75 percent stake in a $1.3 billion Kalimantan coal project. Companies appear Indonesian, but are heavily foreign influenced.
When it comes to the fuel subsidies, the constant banter about numbers hides the real issue: empowerment and resource ownership. The fuel subsidy is the only real claim to ownership or bona fide share interest most residents have on the natural resources in their own country.
In the absence of leadership that will empower, develop or add tangible value to its people, this shouldn’t be taken away. And if the government insists on taking the subsidy away, it should also renegotiate production sharing contracts and mining work contracts that give generously to foreign investors and likely the people that approved them.
Nigeria is a country that has been ravaged by the pitfalls of production sharing contracts and corruption. It has some of the most pristine oil reserves in the world, yet most of its residents live on less than $2 a day. Where has the money gone?
Recently, Nigeria tried to remove fuel subsidies, resulting in severe riots and economic shutdown. Oddly, Nigeria’s current World Bank candidate Ngozi Okonjo-Iweala (a self-proclaimed champion for the poor) supported this removal and in a lengthy discourse explained why it was good for Nigeria’s future.
Nonetheless, President Goodluck Jonathan was forced to backtrack. Nigerians did not believe that any savings in the fuel subsidy would magically accrue to their benefit and development under the current regime.
The takeaway in countries like Nigeria and Indonesia should be from the ones who are benefiting immensely from the current system, not from those struggling on day-to-day subsistence.
China has subsidized prices for a long time to keep the export machine running. Yet a narrower-than-expected trade surplus last month forced China to raise the price of fuel. Nonetheless, China is committed to increasing value-added exports and it must continue to subsidize fuel to play the role of the world’s factory.
The country provides for economic placation by way of continued fuel subsidies and mandating that any investing entities share skills and tech transfers through joint ventures to increase its value added activity on its exports. It has recently mandated that any new investments in its coastal area must be value added, not merely labor intensive.
But unfortunately Indonesia is not considering any such strategy. And the people on the street know full well the impact of lessening any subsidy: any shortfall will be forced on their shoulders, not on those of the elite. The people behind the budgets seem to be playing things by the numbers under a static rubric of today. They are not thinking about the future.
But fuel subsidies should be seen as a long-term, qualitative issue and not a short-term, quantitative one. Instead of a wish list about what a reduction in fuel subsidies might bring, let’s consider a few things that active empowerment, leadership and resource ownership can produce.
Pollution reduction is one. Reducing fuel subsidies will not solve this issue. Only greater investment in public transportation, alternative energy and the education required for developing those factors will in the long term.
The solution is not in building bigger overpasses, longer runways, or wider freeways. That only increases the dependence on fossil fuels. Leadership must make alternative projects a reality.
Value added capacity should be a second priority. Malaysia is already pursing this goal in its oil sector. Its residents are not interested in merely exporting crude and palm oil for short term gain. They want to develop finished oil products for export to developing Asia.
Value added products, under conventional economic theory, raise living standards, salaries and a country’s gross domestic product. China, too, is therefore squarely focused on developing value added exports for its export industries.
Third, don’t forget human resource development, as this is the real key to sustainability. Does Indonesia really want to become a cheaper default to higher-priced Chinese labor? The government’s attitude should be one of selective investment. The main question should be: who stands to benefit more, foreign investors or ordinary residents?
Investments that foster low-wage tourism and apparel making or allow a flood of cheap, Chinese-made goods to enter the market are not the way to go. Trade Minister Gita Wirjawan has approved investment ventures from China into infrastructure, ports and power generation. These investments create higher-wage jobs, but the minister should know that China is well-versed in integrating its own citizens into these projects at all levels in the work processes. And that is an important thing for Indonesia to keep in mind.
But there are other examples for Indonesia’s national leadership to take to heart. The US state of Alaska, for example, and the United Kingdom and Norway take the position that it is citizens who effectively own a country’s natural riches.
The way the people are paid varies. Alaska generates a cash windfall each year that is divided among residents, about $1,000 yearly. The UK has a “citizens first” mandate for educating their own to work in both upstream oil drilling and downstream refineries via its workforce development arm. Norway has a preference for using its oil reserves to empower its citizens via free health care, education and subsidizing childbearing.
Obviously, these are countries with high levels of transparency, but the point is that something can be done for ordinary people if only the political will is there. It should also be noted that in the case of Alaska and in the UK, oil investors originally fought hard against these reforms. It took significant political leadership and vision to force gain-sharing in these industries to benefit the masses.
For Indonesia, exactly that is needed. And the fuel subsidies should be left alone until a real development and growth strategy has been prepared that will benefit all.
[Will Hickey, a former Fulbright professor of energy and human resources, is an associate professor of management at Solbridge International School of Business in Daejeon, South Korea. He can be contacted at whickey solbridge.ac.kr.]
Fuel wars wound Yudhoyono
Asia Sentinel - March 31, 2012
Indonesian President Susilo Bambang Yudhoyono seems almost certain to fall short in his attempt to put in place a 33.3 percent fuel price hike, probably doing incalculable damage to what is left of his presidency and dismaying foreign investors and ratings agencies.
A week of demonstrations nationwide — the worst since Yudhoyono took office in 2004 — culiminated Friday when thousands of demonstrators thronged the streets of Jakarta as a planned vote on the price increase in the House of Representatives neared.
The main route to Sukarno-Hatta International Airport was blocked by protesters, as were two lanes of the Jakarta inner city toll road. Violence erupted in central Jakarta late Thursday and Friday as protesters turned over cars and set them afire. A total of 54 people were arrested on Thursday as police struggled to keep order.
Angry labor unions, student groups, various protest movements and the well-oiled street politics of the opposition Indonesian Democratic Party of
Struggle (PDI-P) managed to create an atmosphere of popular upheaval despite the fact that the economy is robust and the country is largely peaceful.
Added to the stew were the opportunism of the Islamist Prosperous Justice Party (PKS), and Golkar, the second-biggest party in Yudhoyono’s fragile coalition, which backed away from an earlier agreement to support the price hike, leaving the president looking weak.
In the end, only the president’s Democratic Party was holding firm as the House adjourned Friday. It was uncertain if a vote would even be taken as the various parties argued about the acceptable “threshold” price for oil that would get them to trigger a price increase.
But what was really at stake was political and Yudhoyono seems to have taken a thrashing.
The debacle could herald the real beginning of the lame duck phase for a president who has grown progressively weaker during his second term despite his resounding election victory in 2009. With many of his key lieutenants facing corruption charges and his party in disarray, the president seems to have finally lost control of his shaky ruling coalition.
National elections are to be held in 2014 and the country’s chattering classes are already absorbed in pondering the likely next president. In such a climate, nominal coalition allies likely see no practical value in helping the president, who cannot run for a third term, raise fuel prices regardless of the economic sense behind such a move.
The other problem facing the president after such an embarrassing defeat is what to do with his “partners,” Golkar and the small but vocal PKS. Both parties occupy key cabinet posts and one way to discipline them for breaking ranks would be to jettison them from the cabinet. But the president has been reluctant to make decisive moves on his cabinet — or indeed much of anything - although he may be backed into a corner by such open dissension.
The flip side is that Golkar and PKS might even welcome being removed from a floundering government as an election nears. There can be little political advantage for Golkar, the country’s largest party, or PKS, its most fractious Islamist party, in being tied to Yudhoyono’s tattered coattails.
In any case, should the fuel price move fail, it is hard to imagine SBY mounting any major initiative before 2014. Instead, he will likely confine
himself to trying to minimize the damage to him personally from a growing party-funding scandal that has already brought down the party treasurer and a key lawmaker. The mess is likely to also lead to charges being brought against Democratic Party chairman Anas Urbaningrum and two cabinet ministers, Sports Minister Andi Mallarangeng and Manpower boss Muhaimin Iskandar. It is Mallarangeng whom the president likely misses the most. A long-time protege once seen as a possible future president, Mallarangeng has served previously as Yudhoyono’s spokesman and a key political strategist.
“He needs Andi but Andi has been made irrelevant by the scandal,” said a veteran local journalist. “SBY doesn’t have anyone to turn to for strategy or political muscle anymore.”
Likewise, SBY misses his first term vice president, Golkar’s Jusuf Kalla, who was a master at cracking the whip and using his personal charm to keep unruly allies in line. The current vice president, Boediono, while considered to be honest and capable, is a nonpolitical technocrat with almost no political capital.
The end result has been drift and inaction since 2009 for a president who seems out of touch with politics.
His troubles started with the assault on his first finance minister, Sri Mulyani Indrawati, by forces aligned with coal tycoon and Golkar chairman Aburizal Bakrie, who wanted her out because of her zeal in seeking back taxes from his empire and her refusal to allow government bailouts to his ailing companies in the wake of the 2007-8 global financial meltdown. When Sri Mulyani was ultimately driven out of Yudhoyono’s cabinet and into the eager arms of the World Bank, where she became a managing director, there were no negative repercussions for his supposed partners in Golkar or PKS, which also backed the unsightly assault on Sri Mulyani. It was clear there would be no discipline inside Yudhoyono’s political world.
Often criticized for being naive and amateurish, Yudhoyono’s Democratic Party also badly miscalculated when one of its lawmakers said publicly this week that Bakrie had supported a Rp2,000 increase in the fuel price. Bakrie’s statement, made privately, was an embarrassment and he quickly denied it. The Democrat involved was disciplined but the damage to the fuel hike was done and the same day Golkar said it would not vote for the plan.
A deal brokered between the Democrats and Golkar to try to buy off protest through the distribution of direct cash assistance to the public after a fuel price hike appears to have collapsed. Golkar became wary of that maneuver because its leadership did not want to see the Democrats win public support with cash payments financed by the savings the government would realize from cutting the subsidy.
The problem is that the projected fuel price increase, which was expected to drive the cost of subsidized premium fuel, the most popular grade, from Rp4,500 (49 US cents) a liter to Rp6,000, is badly needed. The price of internationally traded crude has risen over the past six months from a low of about US$75 per barrel to hover near US$110 as unrest in the Middle East and the threat of military action against Iran have driven prices steadily upward. It was a miscalculation fostered by Yudhoyono himself when he cut prices shortly after being reelected in 2009.
Most economists agree that the price hike is necessary because of the distortions that subsidies build into the system, especially as prices skyrocket internationally, increasing the amount the government must put into the subsidy. Even at a 33.3 percent increase, the government will still be forced to subsidize a commodity that in reality costs around Rp8,000 for premium fuel. Without a price hike, the government’s budget deficit is expected to rise to 4 percent of GDP, more than double its 2012 target of 1.5 percent.
The government paid US$18 billion in various subsidies in 2011 for fuel, exceeding the cost of Indonesia’s entire social and education system budgets.
Fuel hike opposition a ploy: Analysts
Jakarta Globe - March 31, 2012
Robertus Wardi & Dessy Sagita — Government coalition members are trying to boost their public image and bargaining position over President Susilo Bambang Yudhoyono’s Democratic Party in their last-minute rejection of the fuel price hike, political analysts agreed on Friday.
“I don’t believe the coalition members think about people. For them, it is only a game of achieving self-interested goals while protesters outside risk their lives,” said Yunarto Wijaya, an analyst from political think tank Charta Politica.
While the Democrats pushed the proposal to raise the fuel price by 33 percent from April and three opposition parties — the Indonesian Democratic Party of Struggle (PDI-P), the Great Indonesia Movement Party (Gerindra) and the People’s Conscience Party (Hanura) — firmly rejected it, five other parties in the ruling coalition had their own agenda.
“I respect both Democrats and the opposition who have had clear positions from the beginning. The other coalition members seem like they are only trying to bolster their bargaining power and public image with their last-minute proposals,” Yunarto said.
The state budget law prohibits the government from increasing fuels price this year. The 560-seat House of Representatives was this week debating whether to scrap Article 7.6, thereby allowing the hike.
The Democrats, the largest party in the House with 148 seats, wanted it removed and three opposition parties insisted on maintaining it. The five coalition members came up with different proposed amendments.
They used the Indonesian crude price (ICP) assumption in the state budget (set at $105 per barrel) as a basis to propose different conditions for the
government to increase prices of subsidized fuels, leading to hours of protracted negotiations that pushed the plenary vote late into the evening.
The price is currently 10 percent above that, at $116 a barrel.
The Golkar Party, the second-largest party with 106 seats, said it would only support a fuel price hike if the ICP rose 15 percent above the budget forecast within the next six months. The Prosperous Justice Party (PKS), with 57 seats, rejected the price hike unless the ICP rose 20 percent above the assumption in the next three months.
The National Awakening Party (PKB), with 28 seats, proposed 17.5 percent while the National Mandate Party (PAN), with 46 seats, wanted 15 percent. The United Development Party (PPP) and its 38 seats insisted on 10 percent.
University of Indonesia political analyst Arbi Sanit, however, said the fuel price would ultimately be increased because the politicians realized that the
mounting subsidy would create huge deficit for the budget.
“The politicians only want to show to protesters that they are concerned about their aspirations,” he said. “But the protests are not powerful enough to change the government’s plan.”
Meanwhile, legal expert Yusril Ihza Mahendrac said even if the House failed to clear the way for the government to increase fuel prices, Yudhoyono could get credit by saying that he canceled the plan because he considered the people.
Indonesian fuel price rise on hold for at least six months
Jakarta Globe - March 31, 2012
Ezra Sihite, Robertus Wardi & Arientha Primanita — The government late on Friday night failed to obtain support from the House of Representatives to raise fuel prices from Sunday, with lawmakers debating alternate policies into the early hours of this morning.
After repeated suspensions to allow lobbying, the House plenary session finally voted to possibly raise the price in six months, at which point the Indonesian Democratic Party of Struggle (PDI-P) staged a walkout.
Under the agreed option the fuel price will only increase if the Indonesian Crude Price exceeds the amount set in the budget by at least 15 percent for six months.
The proposal to increase fuel prices sparked massive protests around the country during the week, including one in which demonstrators crashed through the gates of the House even as lawmakers deliberated.
In the face of these developments, President Susilo Bambang Yudhoyono canceled his plan to attend an Association of Southeast Asian Nations leaders summit in Phnom Penh on Tuesday and Wednesday, presidential spokesman Julian Aldrin Pasha said on Friday evening.
“The president has decided to remain in Indonesia, close to the people,”
Julian said. Vice President Boediono will replace him at the summit,
presidential special staffer Teuku Faizasyah said.
At the plenary the three opposition parties — the PDI-P, the Great Indonesia Movement Party (Gerindra) and the People’s Conscience Party (Hanura) — were firm in their rejection of any fuel price increase.
The ruling Democratic Party initially backed the increase but later modified its stance.
Their plan would allow the government to raise the cost of fuel only if the ICP rose a certain percentage above the $105-per-barrel assumed average of oil prices used to formulate the 2012 state budget.
Initially, they wanted a 5-percent difference but eventually shifted their demand to 10 percent and then 15 percent. The five other members of the pro- government coalition of parties laid down conditions that would make it
impossible for the price increase to take place as scheduled.
Golkar, in its opinion read out by lawmaker Ahmadi Noor Supit, proposed that a “fuel price adjustment” only be made if the ICP was at least 15 percent higher than the 2012 budget price assumption for six consecutive months.
Ahmadi said while at first the party had understood the need for a price increase, “When the people began to make demands of the parties, we conducted a review. We reject an increase in the price of fuel.”
The Prosperous Justice Party (PKS), a coalition member, wanted the ICP gap to be at least 20 percent, while coalition member the National Awakening Party (PKB) and the United Development Party (PPP) pushed for 17.5 percent and 10 percent, respectively. The National Mandate Party (PAN) joined Golkar in demanding the ICP be at least 15 percent higher than the assumed price.
Finance Minister Agus Martowardojo said the government could not yet estimate the fiscal risks of leaving fuel prices alone, but said the law dictated that the deficit must not exceed 3 percent.
Purbaya Yudhi Sadewa, chief economist at the Danareksa Research Institute, said the deficit risked surpassing 3 percent but that it would not have too much of an impact on the economy. “In reality, it would not be a problem, the market can absorb it and remain positive,” he said.
[Additional reporting by Agustiyanti & Kunradus Aliandu.]
Minister told off for threats against politicians protesting fuel hikes
Jakarta Globe - March 29, 2012
Markus Junianto Sihaloho, Ezra Sihite & Agus Triyono -- Home Minister Gamawan Fauzi is facing mounting criticism after threatening to punish district heads who took part in rallies against the fuel price increase.
In a visit to the Jakarta Globe office on Wednesday, former President Megawati Sukarnoputri, the chairwoman of the opposition Indonesian Democratic Party of Struggle (PDI-P), warned Gamawan to be careful about saying something she said could be in violation of the law.
“When he was a governor [2005-09] he also rejected the government’s plan to raise fuel prices,” she said. “That’s why I say to him, don’t overreact.”
Gamawan was supported by the PDI-P when he won his job as Solok district head and later as governor of West Sumatra prior to 2009. He was reportedly Megawati’s favorite regional head, and quickly became one of the country’s most popular officials.
In 2009, Gamawan was tapped by President Susilo Bambang Yudhoyono for his re-election team and was later given the Home Ministry portfolio. When Yudhoyono planned to increase fuel prices in 2005, Gamawan was one governor who fiercely opposed the plan.
Megawati said she would defend all PDI-P district heads who took part in allies against the fuel price increase.
A number of PDI-P district heads and mayors took part in demonstrations in their regions on Tuesday, rejecting the plan to raise fuel prices.
They included Malang Mayor Peni Suparto; Solo Deputy Mayor FX Hadi Rudyatmo; Surabaya Deputy Mayor Bambang Dwi Hartono; Sukoharjo district head Wardoyo Wijaya; and Jember deputy district head Kusen Andalas.
This prompted Gamawan to issue a warning to mayors and district heads that they could lose their jobs for violating their oaths and the law.
Yudhoyono’s Democratic Party immediately threw its support behind Gamawan. “If their actions can endanger the state and society, then they can be removed,” said Andi Nurpati, the party’s head of public communications.
She said that what the mayors and district heads were doing amounted to insubordination, and thus, they were in violation of the law.
Legal expert Yusril Ihza Mahendra dismissed the idea that mayors and district heads could be removed from office for taking part in protests. “They can’t be removed by the home minister as they are directly elected by the people,” he said.
Indonesia opposition parties block fuel price hike
Reuters - March 30, 2012
Jakarta — Leading Indonesian political parties said on Friday they will
oppose a government plan to raise fuel prices unless oil prices climb further,
dealing a blow to the ruling party’s efforts to control a swelling budget
deficit in Southeast Asia’s largest economy.
The government wants a 33 percent rise in petrol prices, currently the
cheapest in Asia, from April 1 to reduce a subsidy bill that threatens to
undermine the budget discipline that led rating agencies to lift the country
to an investment grade status.
President Susilo Bambang Yudhoyono’s Democrat Party wants to change the law to
allow a price hike if the Indonesia Crude Price (ICP), a basket of crude oil
prices, rises to average more than five percent above a budget forecast for
$105 a barrel. The price is currently 10 percent above that at $116 a barrel.
But the Golkar Party, part of the ruling coalition and with the second largest
number of seats in parliament, said on Friday it rejected a fuel price hike
and would only support it if the ICP rose 15 percent above the budget
forecast.
Golkar previously supported the fuel price hike but changed its mind after a
week of protests across the country. On Friday thousands of demonstrators
gathered outside the parliament building and blocked access to a toll road to
the airport.
"At the beginning of this debate, Golkar was leaning to understanding the
government’s stance. But when the people demanded, shouted and reminded us
that Golkar is a party of the people, we of course reassessed our position,"
said Ahmadi Noor Supit, a Golkar lawmaker.
Protests over a fuel price hike helped spell the end for autocratic leader
Suharto in 1998, and lifting prices would hurt the bulk of the country’s 240
million people, many still living on a few dollars a day despite years of
strong economic growth.
"The latest manœuvre by Golkar is a smart calculation... this rejection of
the fuel price hike could boost support for Golkar," said Syamsuddin Haris, a
political analyst from Indonesia’s Institute of Sciences.
Other parties also told parliament they rejected the hike or required a rise
in the ICP price of up to 20 percent. Lawmakers are set to continue to thrash
out possible options for a deal, though an April price hike now looks
unlikely.
Failure to pass the proposal in parliament would keep inflation low but
disappoint rating agencies that want the government to use the $18 billion it
spent on fuel subsidies last year for much-needed infrastructure instead.
Lawmakers postponed the vote until the last minute as they feared supporting
the move would hurt their popularity in the run-up to national elections in
2014.
Subsidies keep pump prices at just half the market rate, spurring fuel demand
in Asia’s largest gasoline and diesel importer and helping boost car sales to
record highs. Lifting prices by a third would only take them to a level
reached in 2008 after Yudhoyono hiked prices following a oil price spike.
The president cut prices in 2009, as oil prices declined during the global
financial crisis. His plan to lift them again comes as oil prices have surged
because of concerns over Iran’s exports.
"At this late stage, failure to have the fuel price plan approved by the
legislature would be a major political blow for the administration and likely
to have economic repercussions," said Jakarta-based risk analysts Concord
Consulting.
Without a price hike, the government sees the budget deficit widening to 4
percent of GDP, more than double the 1.5 percent it was aiming for this year.
However, the central bank has said lifting fuel prices will boost inflation
above its target to over 7 percent, from 3.6 percent in February. It is also
likely to dampen consumer spending, the main driver of the economy in the G20
member.
Indonesia, a former OPEC member, has long subsidized pump prices as do other
major producers such as Iran, but declining crude output and dilapidated
refineries mean it relies on costly motor fuel imports. Economists say weaning
consumers off subsidies is critical to the country’s long-term financial
health.
[Additional reporting by Adriana Nina Kusuma and Reza Thaher.]
Fuel price-Protests continue, Makassar still on alert
Jakarta Post - April 1, 2012
Medan/Makassar — Rallies against the government’s fuel-price plans continued in several cities across the country on Saturday with the protesters targeting lawmakers.
The fuel-price hike that prompted nationwide rallies by university students and other civic groups over three consecutive days will not take effect on April 1 as initially sought by the government.
However, the protesters appeared to be irritated by the prospect that the hike would probably be unavoidable after lawmakers concluded their plenary session after midnight on Friday.
The protesters in Medan and Makassar were adamant on Saturday they rejected the hike, now or in the future. “We’re against the fuel-price hike at any time. That’s nonnegotiable,” rally coordinator Jumeida said in Medan.Some 300 people from various organizations joined the rally. The rotesters vowed to continue to press the government into canceling the hike. Jumeida said the lawmakers’ decision was farcical, made only to calm public anger.
Hendra Hidayat, chairman of the Muslim Students’ Association (HMI) Medan
branch said people wanted cancellation not postponement of the hike. "The
House is being hypocritical and trying to fool the people," he said.
Medan has been one of the rallying venues across the country marred by
vandalism. Governor Gatot Pujo Nugroho said his administration would go to
campuses to hold dialogues with the students.
In Makassar, the rallying crowd accused lawmakers of betraying the people,
seeing the House decision as akin to giving the government permission to raise fuel prices. “[President] SBY [Susilo Bambang Yudhoyono] — [Vice President] Boediono and the DPR [the House] are just the same. Both are betraying the people,” shouted a protester.
In Surakarta, the city administration had to drop a plan to hold the Earth
Hour campaign on Saturday evening following the escalating protests in the
region over the past month.
Deputy Mayor FX Hadi Rudyatmo said he would not risk the event. “I just don’t want any irresponsible individuals damaging stability in the city by making use of the Earth Hour movement,” he said.
Fight over Indonesia’s fuel hikes not over
Jakarta Globe - April 1, 2012
Dessy Sagita — The war is not yet over for those who battled the fuel price hike despite a decision made during the House of Representative’s plenary session in the early hours of Saturday.
“Some labor unions are pooling forces to bring the newly-passed Law on Revised State Budget 2012 to the Constitutional Court for judicial review,” said Said Iqbal, president of the Indonesian Trade Union Confederation (KSPI).
“The Law is not pro-people and we will particularly focus on the contentious article 7 of subarticle 6 A. Labor unions, especially KSPI, cannot accept the decision made by the House of Representative because the article gives the government an opportunity to raise the fuel price.”
In the blogosphere on Saturday, anti-corruption activist Fadjroel Rahman asked fellow activists and Budiman Sujatmiko and Eva Kusuma Sundari, politicians from the Indonesian Democratic Party of Struggle (PDI-P), to meet on Monday to formulate a petition to be submitted to the Constitutional Court.
Benny Susetyo, from the Indonesian Bishops Conference (KWI), said he was optimistic that the controversial subarticle would be revoked by the Court because it was against the 1945 Constitution. The same Court repealed an article from the 2001 Oil and Gas Law in 2005, as it suggested the price of fuel and natural gas would depend on a healthy competitive market.
The 1945 Constitution clearly stipulates that natural resources must be explored and used for the greater good.
“Principally, it’s the same problem with the 2005 law,” he told a discussion
on Saturday. “There will be a lot of elements and organizations that file a judicial review on that controversial sub article and I believe that the Court will revoke it,” he added.
Benny charged that the addition on article 7 of subarticle 6 A was a trick invented by lawmakers to save face and to respond to the situation outside the House building.
The proposal to increase the fuel price sparked massive protests around the country during the week, including one in which demonstrators crashed through the gates of the House as lawmakers deliberated.
After a noisy vote, the tight and prolonged plenary, which opened on Friday
morning, failed to pass the government’s proposal to raise fuel prices. More
than 350 lawmakers voted to possibly raise the price in six months. The 24-
member People’s Conscience Party (Hanura) staged a walkout and was followed by
the Indonesian Democratic Party of Struggle (PDI-P). Under the agreed upon
option, the fuel price will only increase if the Indonesian Crude Price (ICP)
exceeds the amount set in the budget by at least 15 percent for six months.
"Although the government cannot raise the fuel price starting today as it had
previously planned, the prices of consumer goods have already gone up. Because
of that, we also demand the government to make an effort to control the prices
of consumer goods and staple food supplies that have been soaring in price,"
Iqbal, of KSPI, added.
Scores of police stations damaged in protest
Jakarta Post - April 2, 2012
Jakarta — The Indonesian Police Watch (IPW) reported on Sunday that the
recent five-day series of massive rallies to protest against the government’s
plan to increase fuel prices had resulted in damage to at least 16 police
stations nationwide.
In its press release, IPW said four damaged police stations were located in
Jakarta, while the remaining 12 were located in several other big cities, like
Makassar, Medan, Yogyakarta, Samarinda and Kendari.
The rallies, held from March 27 to March 31 by students, activists and
supporters of the Indonesian Democratic Party of Struggle, the country’s
largest opposition party, also damaged four patrol cars and one police
motorcycle.
The House of Representatives decided early on Saturday to allow the government
to raise subsidized fuel prices only if the Indonesia Crude Price (ICP) was 15
percent higher than assumed in the state budget within six months, meaning
that the government had to cancel its initial plan to increase subsidized fuel
prices today.
Day of rage grips Indonesia as protests come to a head
Jakarta Globe - March 31, 2012
Bayu Marhaenjati, Ronna Nirmala & Dessy Sagita — Shots were fired, dozens of
people were arrested, some were badly injured and offices and facilities were
burned and vandalized across the country on Friday as protests against the
proposed fuel price increase reached their fevered peak.
Security forces doubled their presence on a day that saw more than 80,000
people take to the streets nationwide, according to protest organizers.
Tear gas canisters and rubber bullets were fired in front of the House of
Representatives in South Jakarta after protesters refused to disband after the
sun set.
Hours earlier, protesters took down the three-meter-high gates at the House
complex and demanded to see lawmakers who were inside the building
deliberating the proposed hike. The police immediately pushed the
demonstrators back, then set up barricades to prevent them from occupying the
building.
Around 7 p.m., the police moved to disperse the crowd, which was blocking two
lanes of the inner-city toll road, by setting off fireworks. While most
protesters fled, some fought back using smashed up concrete dividers and
Molotov cocktails, prompting officers to respond with rubber bullets, tear gas
and water canons. The Jakarta Police said 21 people were arrested.
National Police Chief Gen. Timur Pradopo said the crackdown "was in line with
procedures."
In Salemba, Central Jakarta, students burned tires and blocked roads to
protest the arrest of 54 of their peers on Thursday. They also accused the
police for raiding the offices of the Indonesian Legal Aid Foundation (YLBHI)
and the Indonesian Administrative Foundation (YAI) for sheltering protesters.
In Bima, West Nusa Tenggara, a 23-year-old student, Khairuddin, was shot in
the thigh and had to be rushed to the hospital for massive blood loss and
injuries.
His peers suspected that the police were using live rounds, but provincial
police spokesman Adj. Sr. Comr. Sukarman Husein insisted officers had only
used rubber bullets and tear gas to disperse the crowds. "[Protesters] were
blocking the road and disrupting public activities," the officer said.
In Samarinda, East Kalimantan, and Medan, protesters set fire to local police
stations, vandalizing state property as they marched toward their rally
points. One protester in Medan was arrested.
In Makassar, South Sulawesi, students attacked the governor’s office, pelting
windows with rocks and rocking the office’s main gate until it collapsed.
In Bogor, one student protester, Abdul Basyid, was rushed to the hospital
after the police allegedly beat him. That prompted clashes between protesters
and officers, with rocks and taunts exchanged. Eight people were arrested. "We
were carrying out our protest peacefully. It is the police who are the real
vandals," said one Bogor student, Gema.
[Additional reporting by Fitri, Rahmat, Tunggadewa Mattangkilang, Aidi Yursal
& Vento Saudale.]
54 arrested in violent anti-fuel hike protest in Central Jakarta
Jakarta Globe - March 30, 2012
Farouk Arnaz — Police arrested 54 people in Salemba, Central Jakarta, on
Thursday evening when the protest against the government’s plan to raise fuel
prices turned violent.
National Police spokesman Insp. Gen. Saud Usman Nasution said 54 people were
arrested because they were allegedly involved in setting several vehicles
belonging to the police on fire and they were caught carrying Molotov
cocktails, stakes and slingshots during the protest.
Police have been criticized for attacking the offices of the Indonesian Legal
Aid Foundation (YLBHI) and the Indonesian Administrative Foundation (YAI) on
nearby Jl. Diponegoro during the violent clash, but Saud said the officers
were only trying to chase students who had set fire to the vehicles.
“They had no intention to conduct a peaceful protest; they want anarchy,” Saud
told a press conference at the National Police headquarters in Jakarta on
Friday.
Rumors spread on Thursday evening that two students died in the violent
Salemba protest, but Coordinating Minister for Political, Legal and Security
Affairs Djoko Suyanto quickly denied it.
In a press conference held in his office in Jakarta on Friday morning, Djoko
said no one died in the incident, although five students, one security guard
and the chief of the Senen Police precinct were injured and being treated at
Cipto Mangunkusumo Hospital, which is near the scene of the protests.
(BeritaSatu/JG)
Thousands workers show off against fuel price hike
Jakarta Post - March 30, 2012
Ridwan Max Sijabat, Jakarta — More than 5,000 workers from industrial areas
in and around Jakarta staged a mass demonstration at the front gates of the
legislative compound, demanding the House of Representatives (DPR) turn down
the government’s plan to increase fuel and electricity prices in April and May
respectively.
Protesters from the Confederation of All-Indonesian Workers Union (KSPSI),
Confederation of Indonesian Prosperous Labor Union (KSBSI), Confederation of
Indonesian Workers Union (KSPI), Federation of Indonesian Metal Workers Union
(FPSMI), Indonesian Workers Organization (OPSI) and Joint Indonesian Workers
Secretariat (Sekber Pekerja Indonesia) decried the planned fuel price hikes
that would certainly affect their economic livelihood.
"One command, one resistance. Lawmakers must reject the proposed fuel price
hike," they shouted.
Hundreds of riot police, eight water cannons and four fire trucks stood by in
case chaos broke out, while hundreds of armed military personnel were deployed
inside halls and a mosque in the compound.
KSPSI Chairman Said Iqbal said in a forum the workers’ presence was part of
mass demonstrations, which involved tens of thousands of workers in big cities
throughout the country, with one aim — the rejection of the fuel and
electricity price hikes.
"We come here to urge the House to reject the government’s proposal of
increasing the fuel prices on April 1 and the power tariff price on May 1. We
come here to give moral support for lawmakers to channel the people’s
opposition to the planned fuel price increases. We are here to back up
lawmakers from the PDI-P, Golkar, PKS, Gerindra and Hanura to channel our
aspirations," he said.
He called on lawmakers to no longer remain loyal to their own political
parties, which he said have been inattentive to the real conditions people
face at the grass-roots level. "Lawmakers should fight for a ’one man, one
vote’ mechanism in the planned vote for the proposed revision of the 2012
state budget law."
Newly-elected Chairman of KSPSI Andi Ghani Nuwa Wea called on lawmakers to
listen to the people’s aspirations, and asked the government and security
authorities not blame workers if the national demonstrations turned violent.
The protesters said they would stay put at the gates of the DPR until the
House ultimately opposed the fuel price hike plan in the upcoming vote. "We
will perform the Friday prayers on Jl. Gatot Subroto and stay at the scene
until dawn on Saturday. The House has no choice but to turn down the planned
fuel price hike," he said.
Protesters block Jakarta inner city toll road toward airport
Jakarta Globe - March 30, 2012
People heading toward Soekarno-Hatta International Airport in Tangerang, west
of Jakarta, were forced to take other routes, such as the Jakarta Outer Ring
Road in South Jakarta or the Cawang-Pluit toll road in North Jakarta, as
protesters blocked two lanes of the Jakarta inner city toll road.
The toll road was blocked at the section in front of the House of
Representatives in West Jakarta, allowing no vehicles to pass through and
forcing the TransJakarta Busway to cease operations.
Hundreds of cars were trapped as they tried to access the route, and were
forced to turn around and head in the opposite direction as hundreds of
protesters broke through a fence divider onto two lanes of the toll road,
allowing no vehicles to pass.
No security guards or toll officers seemed able to do anything to stop the
demonstrators, detik.com reported.
Thousands of protesters staged demonstrations outside the House against the
government’s plan to raise fuel prices on April 1. Lawmakers are expected to
vote on the proposal in the plenary session being held at the time of writing.
Police shoot tear gas as anti-fuel hike protesters break into DPR
Jakarta Globe - March 30, 2012
Police shot tear gas at thousands of protesters occupying the road outside of
the House of Representatives in Jakarta on Friday as protesters forced their
way into the front yard of the House by breaking down the gate.
Since Friday morning, thousands of protesters have been staging demonstrations
against the government’s fuel price hike plan outside the House, known as the
DPR, which is holding a plenary session to decide whether or not to support
the government’s move.
On Friday evening, as the plenary session was adjourned following prolonged
debates over the hike plan, protesters finally managed to break the front gate
and quickly flooded the House front yard.
The latest move prompted security officers to take action by shooting tear gas
at the crowd, dispersing them and forcing them out of the House yard.
Live TV footage shows protesters fleeing the scene, and they are now throwing
stones at police, who are still occasionally shooting tear gas.
Protesters occupied the section of the Jakarta inner city toll road in front
of the House, blocking the main access toward Soekarno-Hatta International
Airport in Tangerang from eastern Jakarta.
Students, police in violent brawl
Jakarta Post - March 29, 2012
Jakarta — Police and students were involved in a violent clash on Jl.
Diponegoro after students started to burn tires during a day-long rally held
by students of the Indonesian Christian University (UKI) and the Indonesian
Persada University (UPI-YAI) in front of their campuses in Salemba, Central
Jakarta.
Students effectively closing down a stretch of Jl. Diponegoro, beside the
Cipto Mangunkusumo General Hospital (RSCM) and set tires alight.
The students had been provoking police and were enraged when one activist was
detained. They then stormed a police post on Jl. Dipongoro, demanding the
student’s release.
Tensions heightened in the evening, when a police car was trapped in a traffic
jam before being ambushed and set alight by students blockading Jl. Diponegoro
in front of the Indonesian Legal Aid Foundation (YLBHI) office. Protesters
have been using the office as a kind of transit place.
Police deployed two Barracuda armored-vehicles to the office to look for the
students who burned the patrol car.
The clashes ended at about 9:45 p.m. after the students retreated to their
campuses while the police reopened Jl. Diponegoro.
The relationship between students of the two universities during the rally was
somewhat ironic, as they have been known to dislike one other and brawl.
"This is the beginning of peace between the UKI and the UPI. We are united to
reject the fuel-price hike plan," a UKI student said in a speech during the
rally, as quoted by kompas.com.
At around dusk, when the tires burnt out, several students from the UPI came
along, bringing a new tire to burn. UKI students welcomed the “gift” while
singing a song.
A similar clash also took place in Makassar, South Sulawesi, between security
personnel with students of the Muhammadiyah University (Unismuh). (mim/rpt)