Jakarta delays fuel hike to avert unrest

Gus Dur continues to walk tightrope between IMF-stipulated measures and winning support for it.

The Indonesian government yesterday delayed a fuel hike to avert threats of mass demonstrations in the country.

Not prepared to bite the bullet on economic reform, President Abdurrahman Wahid continued to walk a tightrope between taking measures stipulated by the International Monetary Fund (IMF) to heal a battered economy and winning public support for it.

With Parliament warning that oil-price increases could spark civil unrest and as students and non-governmental organisations planned to mobilise thousands to hold street protests today, the President held back the controversial rise.

“The government has decided to postpone the increase of fuel prices until we decide that the time is right,” he told reporters.

But not wanting to put an end to a thorny issue which ironically toppled former President Suharto in May 1998 after he announced a 71-per-cent fuel-price increase, he said that the government would review conditions every week.

He said that the rise would be implemented when “we decide that the time is right for that”.

Analysts said that the decision would calm public anger for now with some suggesting that the government was pushed into a corner on the matter not just by students and NGOs but even by legislators.

Parliamentary Speaker Akbar Tandjung yesterday said that he had delivered a letter from the House of Representatives to persuade Mr Abdurrahman to hold back the decision to raise fuel prices given its impact on the poor.

Said a Jakarta-based diplomat: “Two years ago, we did not have a government that had broad political legitimacy. There has also not been large-scale and protracted demonstrations these last few months for it to explode to a level it did in 1998.”

Jakarta’s biggest headache is the impact of its latest decision on the Budget.

Said economist Umar Juoro: “How will it get sufficient funds without the removal of fuel subsidies? With high fuel subsidies, it also means that it cannot allocate money for other expenses like creating jobs.”

While the IMF had indicated that the government could delay the price increase, analysts said there was no guarantee it would maintain its stance for long given its recent decision to postpone payment of a US$400 million (S$680 million) loan tranche over concern about the slow pace of economic reform.

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