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Fuel Prices More than Double

Long-anticipated Major Hike in Fuel Costs Introduced on October 1, 2005.

(10/2/2005) Although widely viewed as both necessary and inevitable, President Susilo Bambang Yudhoyono took the politically painful step of announcing dramatic increases in the cost of fuel Indonesian's pay at the gas pumps, effective from October 1, 2005.

Announced in the early hours of Saturday following a cabinet meeting at the National Palace in Jakarta, the Coordinating Minister for the Economy Aburizal Bakrie read presidential decision No. 55 for 2005 telling consumers that they would now pay 87.5% more for premium, 185.7% more for kerosene, and 105% more for diesel fuels.

Large demonstrations by the public and students protesting the fuel increase in front of the national palace and elsewhere in the Capital were contained by a supplemental police contingent estimated at more than 5,000 on stand by in anticipation of public discontent with the new policy.

Government Socializes its Decision

In an aggressive campaign to sell the need and urgency of higher fuel prices to the public, Indonesianís received SMS messages from the Government on October 2 urging them to accept the increase as a means of diverting revenues from the rich to more needy members of society. Similarly, quarter-page advertisements carrying an open letter from the President appeared in most major dailies on Saturday. In that letter the President explained how the growing subsidy paid for fuel use was draining the Government of revenues needed to address education, health and national development and pledge direct financial subsidies to the nationís poor and near-poor to help them meet the cost of higher fuel.

In the letter the President cautioned against those using the fuel increase as the basis for disproportionately increasing the price of basic commodities.

 

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