Indonesia backs off plans to hike price of gas after protests
But pressure continues to mount to increase prices from their current, government-subsidized $2 per gallon, as the subsidies sap resources from education, health care, and other programs.
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Now the decision to delay the price hike could hurt the country’s ability to obtain a coveted credit boost from Standard & Poor’s, the last of the big three ratings agencies to return the country’s credit rating to investment grade for the first time since the 1998 Asian Financial Crisis.Skip to next paragraph
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But protests here set off alarm bells among politicians who remember how a cut to blanket subsidies in 1998 sparked riots that eventually forced former strongman Suharto from power.
Politics, not protests
The Indonesian government is still cleaning up after the March 30 protests, when more than 80,000 students, trade union members, and farmers took to the streets across the country, burning tires, blockading roads and pelting government offices with stones. The wall outside the parliament building now has a fresh coat of paint to cover crude graffiti from thousands of demonstrators who faced tear gas and water cannons operated by police.
As protests escalated, Golkar, Suharto’s former political vehicle and the second-largest party in the ruling coalition, turned against the planned increase. Sulaiman said it was likely politics, not protests, that led to the about face.
“Golkar is basically stabbing the Democrats in the back,” he says, explaining how the party’s rejection signals faltering support for a leader increasingly criticized of running the country on autopilot during his second term.
Activists say the decision reached on Saturday is not a solution, and they will continue to pressure the government to prevent an increase in the future.
“It’s important to keep up the momentum to make sure that the government is not engaging in party politics,” said Riza Damanik, a spokesman for the Popular Opposition Front, a civil society group that helped organize Friday’s protests.
Rather than scrap the subsidy, Basri said the country needs to “adjust” the fuel price to improve its long-term fiscal health. It also needs to ensure that the any subsidy benefits the poor at whom it is targeted.
Around half the population here survives on less than $2 a day, and many say they would be badly hurt by even the slightest increase in fuel – and the knock-on inflationary effects that would raise prices for food and other goods.
“The lives of the poor are still very bad here,” says Ketut Ceplok, who owns a small shop wedged between resorts in Bali and describes how rain used to come in through the bamboo-woven walls of her home. “My children do whatever they can to have a house where the water doesn’t come in, so they don’t have to search for food.”
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