Protests erupt in Indonesia over rising fuel prices – The Diplomat

Beat ASEAN | Economy | South East Asia

Student groups and unions have pledged to step up protests against the government’s cut in a fuel subsidy.

Student activists wave flags as they burn a tire during a rally against steep fuel price hikes, in Jakarta, Indonesia, September 8, 2022.

Credit: AP Photo/Achmad Ibrahim

Hundreds of students gathered in the Indonesian capital and other cities yesterday for the fourth day in a row to protest against the sharp rise in fuel prices resulting from the reduction of a government fuel subsidy.

Subsidized petrol and diesel prices jumped by around a third last weekend after Jokowi cut fuel subsidies in a bid to prevent a multi-billion dollar budget overrun. This raised the price of subsidized gasoline from 51 cents to 67 cents per liter and diesel from 35 cents to 46 cents – the first increase since 2014.

According to the Associated Press, protesters gathered yesterday at Monas, the national monument in Jakarta, which commemorates the Indonesian struggle for independence. Some burned tires, while others hoisted flags and unfurled banners saying, “We reject fuel price hikes.”

For months, the administration of President Joko “Jokowi” Widodo has spent billions of dollars to protect the Indonesian public from rising prices for oil, cooking oil and other commodities – due to the rise in world oil prices and the weakening of the Indonesian rupiah. But Jokowi said last month that as a result, the government had increased the state budget allocation for subsidies from 152 trillion rupees ($10.2 billion) to 502 trillion rupees ($33. $8 billion).

As expected, this decision immediately sparked protests, which were organized in cities across Indonesia by students, workers, farmers, fishermen and teachers. Protesters say rising fuel prices will hurt many ordinary people, already reeling from inflation and the economic repercussions of the COVID-19 pandemic.

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Reporting on a protest on September 6, Reuters journalist Stanley Widianto observed a shirtless protester “with his feet chained to an empty petrol tank, carrying a sign highlighting the hardship caused by rising costs”. According to the Associated Press, Said Iqbal, the president of the Confederation of Indonesian Trade Unions, said workers are planning more rallies and considering a nationwide strike unless the fuel increase is reversed.

Although the protests remain relatively contained so far, they reflect the political sensitivities associated with rising prices of essential goods. The commitment to controlling the costs of these items has long been a fundamental part of the Indonesian social contract – a contract that has seen the government intervene in various ways in the functioning of the market. As I noted last week, the government has recently taken steps to control the cost of cooking oil, in the context of soaring prices caused by the Russian-Ukrainian war (these have also prompted protests), and electricity, by limiting coal exports to ensure good supplies for domestic electricity generation.

Jokowi’s administration is well positioned to weather the political storm. The president is nearing the end of his second and final term and controls a large parliamentary coalition that includes most of the country’s largest political parties. He also promised to offer direct cash transfers and other forms of compensation to 20 million households in need, to offset rising fuel costs and possible inflation in other sectors of the economy. .

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