Poor hit hard as fuel prices rise

The increase in Indonesian fuel prices has hit the poor and middle class hard. Many taxi drivers in Jakarta have had to absorb the 30 percent jump in petrol prices. Most rent their cars and while they are paying more at the pumps, the companies have not r
(Ahmad Pathoni/IRIN)

These days taxi driver Rusdi often earns little more than 50,000 rupiah (US$5.50) for driving a 17-hour shift through Jakarta's congested traffic. The increased cost of petrol is stealing a large chunk of his income.

The Indonesian government decided in May to raise fuel prices by 30 percent, forcing Rusdi to spend significantly more on petrol, but the taxi company for which he works has neither increased fares nor reduced his daily fee to drive the taxi.

"My company doesn't care about our problems," he told IRIN. "Now we're the ones who have to subsidise fuel for the company." The additional charges for petrol, plus the costs of repairs and the daily cab rental fee, are forcing taxi drivers like Rusdi to work longer and longer hours.

When the government raised fuel prices, the move sparked protests throughout the country where millions of poor people were already hit by rising food prices. An increase in fuel costs means higher prices of essential commodities and transport.

As a result, the number of poor people in Indonesia is expected to reach 41 million from 37 million last year, said Latif Adam, an economist at the Indonesian Institute of Sciences.

"Obviously with the rising [consumer] prices that followed the fuel price hike, people who were in the near-poor category have become poor," he told IRIN.

The government sought to soften the blow with monthly cash handouts of 100,000 rupiah (about $11) to the poorest Indonesians until the end of the year, but Adam said the rising prices of basic commodities meant the initiative would have little effect in reducing the poverty rate. Nearly half the population of 220 million people lives on less than $2 a day.

Inflationary pressures

The National Bureau of Statistics said on 1 July that annual inflation rose to a 21-month high of 11.03 percent in June. But Indonesian Finance Minister Sri Mulyani said the inflationary pressure was temporary.

''My company doesn't care about our problems. Now we're the ones who have to subsidise fuel for the company.''

"We expect it to happen two or three months after the fuel price hike, but after that the level will be normal again," she told reporters on 1 July.

But for Karya, who sells fried food on the street outside an upscale Jakarta mall, that is small comfort: "Everything has become more expensive, including cooking oil and flour." After the government raised fuel prices, his income dropped by about 50 percent. In the past, he would earn 200,000 rupiah ($20) on a good day.

The fuel price hike has taken a toll on the popularity of President Susilo Bambang Yudhoyono. A survey released on 29 June by a private agency, Indo Barometer, showed Yudhoyono's popularity rating down to 36.5 percent from 55.6 percent in its last survey in December 2007. The poll also found that if elections were held now, more Indonesians said they would vote for former President Megawati Sukarnoputri.

A hefty fuel price increase in 1998 at the height of the regional financial crisis contributed to protests so widespread that they forced then-president Suharto to resign.

Yudhoyono has not said publicly if he would seek re-election in the 2009 poll but it is widely expected that he will.

Street vendor Karya said he did not care about who was going to be elected president. "Whoever the president is, is the same. Little people like us will always suffer," he said.

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This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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