Indonesia presses on with fuel hike

Written By Unknown on Selasa, 18 Juni 2013 | 15.22

INDONESIA has defied popular anger by pressing ahead with its first fuel price hike since 2008, a day after police fought running battles with thousands outside parliament.

Protesters hurling Molotov cocktails clashed with police firing tear gas and water cannons late Monday, as MPs approved measures paving the way for a reduction in crippling fuel subsidies in Southeast Asia's top economy.

As police braced for hundreds to converge on parliament on Tuesday for a second day of protests against the expected 30 per cent increase in fuel prices, ministers said the government would not back down.

"The fuel price will go up," Finance Minister Chatib Basri insisted, saying it was just a matter of finalising the details before an announcement, which is expected in the coming days.

"The hike is very important because of global economic uncertainty," he added, referring to a sell-off on emerging markets this month that has sent Jakarta stocks and the rupiah plummeting.

Vice-President Boediono urged citizens to "stay calm" and not hoard fuel, as reports emerged that people were starting to stockpile subsidised petrol before the price rockets.

Police in West Java and Lampung provinces seized thousands of litres of fuel allegedly bought in anticipation of a price hike and detained several people, while state energy firm Pertamina said sales had increased three to four per cent in recent days.

The price of fuel is expected to increase on average 33 per cent, with petrol jumping from from 4,500 rupiah ($A0.47) a litre to 6,500 rupiah, and diesel from 4,500 rupiah to 5,500.

Following a marathon parliamentary session on Monday, MPs agreed on a revised budget that included a package of measures to compensate the millions of poor people likely to be hit hardest.

Poor households will receive $15 a month each for the next four months to offset the impact of the fuel hike, which is expected to cause the cost of everyday goods to go up as they will be more expensive to transport.


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