Fuel prices
April 2, 2012
On Saturday, Indonesian lawmakers voted against a government plan to raise fuel prices by more than 30 percent.
The 550-seat house voted to allow a price hike only if the average price of Indonesian crude rose by over 15 percent in six months.
After weeks of nationwide - and sometimes violent - protests, the Golkar Party had withdrawn its support for the proposal late Thursday, putting the government's plans into jeopardy.
"The Golkar Party says that there is no need to raise the fuel price," party chairman Aburizai Bakrie said, pointing out that the government could afford to keep the subsidies, which keep pump prices at about half the market rate.
The government had proposed a 33 percent rise in gasoline prices, currently the cheapest in Asia, to reduce a swelling subsidy bill that threatens to undermine Indonesia's effort to cut spending and keep its favorable international credit rating.
Growing protests
Some 40,000 police and troops were deployed to safeguard Jakarta ahead of the vote after demonstrations against the fuel hike plan turned violent on Thursday. A police spokesman said that at least 19 people and 10 policemen were injured in the capital when protesters starting throwing stones and police retaliated with tear gas and water canons.
In the past, protests over fuel prices contributed to the end of an Indonesian government, under the autocratic rule of Suharto in 1998. Lifting prices would sorely pinch the pocketbooks of most of Indonesia's 240 million inhabitants, but not doing so could undermine confidence in Southeast Asia's largest economy, analysts say.
Syamsuddin Haris, a political analyst at Indonesia's Institute of Sciences, said Golkar's move was an attempt to look good in front of the public and possibly extract concessions from their coalition partner.
Author: Gregg Benzow / act (Reuters, AFP, AP)
Editor: Sarah Berning