No Decision Yet on Price Increase Indonesia's Subsidized Fuel
The plenary session of Indonesia's House of Representatives (DPR) is still ongoing as the various political parties could not agree yet on the increase in the price of subsidized fuel. Five political parties agree to the price hike, while four others have rejected it. If the political parties can not agree to the proposal, then it will be decided by individual voting starting from midnight (Indonesian time). The price hike has been long awaited as a measure to relieve pressure on Indonesia's budget deficit.
Many Indonesians oppose the price hike as it will result in higher inflation and thus makes life more expensive. In a number of regions, demonstrations were staged in order to try to block the increase. These demonstration went relatively peacefully except for Jambi (Sumatra) and Ternate (Moluccas) where several people were injured when police and demonstrators started to attack each other. The injured people involved police men, journalists and protesters.
The issue of the subsidized fuel price increase has been ongoing for many months. The Indonesian government spends a large portion of its subsidy budget on fuel subsidies. But due to robust and increasing fuel demand in combination with Indonesia's declining oil output, it has resulted in expensive oil imports that seriously burden the government's current account. The downside of raising the price of subsidized fuel is that it will trigger high inflation and social unrest.
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