Protests by tens of thousands of workers and students have rocked Indonesia since the government of President Abdurrahman Wahid and Megawati Sukarnoputri, under pressure from international creditors, decreed an average 12% increase in the price of domestic fuel on October 1.
In Makassar in South Sulawesi, police had used live ammunition and rubber bullets on thousands of students from various universities, according to reports in the October 4 Straits Times. Some 18 students were detained. The students in turn took six public servants hostage and demanded that the governor, Palaguna, apologise for the excessive use of force.
Following the release of the hostages, the rector of the Alauddin State Islamic University announced he would resign if the governor refused to apologise.
With the pressure on, Palaguna declared his opposition to the fuel price rise and asked for its delay. "Increased fuel prices always result in increased prices of other goods, including staples", the Jakarta Post quoted him as saying.
Students organised in Front Padang, in the west Sumatra capital of Padang, and the National Student League for Democracy (LMND), in the central Java city of Semarang, also mobilised against the fuel subsidy cut.
In Bogor in West Java, hundreds of public transport drivers went on strike, blockading the main roads, demanding that city councillors approve a 40% hike in fares to offset the fuel price increase. The New Alliance for Democracy, which includes six student and worker groups, held days of protest in nearby Bandung.
In Jakarta, the 18 unions making up the Union Solidarity Forum (FSU) issued an October 1 statement calling on the government to cancel the rise and increase wages by 100%. The forum includes the country's most influential independent unions, including the Indonesian National Front for Workers Struggle (FNPBI), the Reformed All-Indonesian Workers Union (SPSI Reformasi), the Indonesian Prosperity Workers Union (SBSI) and the Confederation of Indonesian Labour Unions (Gaspermindo).
On the eve of the fuel price rise, the government announced it would launch several new social programs from the expected US$1 billion in funds saved. The money will be available for small business grants, village improvement projects and emergency cash for needy families.
In a statement issued by the FNPBI on October 1, the union's president Dita Sari said, "Nobody can dispute the fact that an economic recovery would need a lot more money injected into the economy, but cutting the fuel subsidies is not the solution".
The Indonesian mainstream media has backed the government's line, arguing that the fuel subsidy only benefited the rich and that cutting it will help the poor.
The Jakarta Post editorialised on October 2, "The government's policy of keeping domestic fuel prices as inexpensive as possible, all in the name of protecting the poor, must count as the biggest national conspiracy ever concocted by the country's ruling elite. The poor are the very last people to benefit from the cheap fuel subsidy which has been sustained for decades through a heavily subsidised system."
But Sari said, "The 12% rise in fuel has created panic-buying across society. This is despite the government saying there wouldn't be a [general] price increase following the fuel price rise. Clearly the industrial sector, which uses some 22% of the total fuel budget, is passing the increased costs on to the consumer and it exposes the lie that the fuel subsidy only advantaged the rich."
It's no wonder the protests are making some officials a little nervous. After all, it was the last fuel rise in 1998 which sparked the mass movement which culminated in the downfall of former general Suharto.
While the former ruling party, Golkar, has fully backed the government's neo-liberal measures, House of Representatives speaker and Golkar faction leader Akbar Tanjung is keen to appear sympathetic to the people's plight. He has called for the government's price control team, which has responsibility for keeping the inflationary effects to 3%, to release its findings and punish those profiting from the fuel price hike.
The minister of energy and mineral resources, Purnomo Yusgiantoro, also in a bid to deflect public anger, said that the decision to increase fuel prices had been difficult. He hinted that the government had no other option if it was receive credit from the International Monetary Fund and the Consultative Group on Indonesia (CGI), a body of the main Western donor countries.
On September 14, the IMF approved another US$399 million instalment from the US$5 billion loan program signed in February. However, in its review of the Indonesian economy, it warned that private capital was still nervous about investing in Indonesia due to political instability, and that an economic recovery would only take hold if public services and subsidies were reduced.
The Indonesian government is hoping to secure US$4.8 billion from the CGI to help reduce a projected 2001 budget deficit of US$6.23 million, caused by a budget blow-out associated with the IMF-driven bank restructuring and recapitalisation program.
The FNPBI says the fuel price rise is a consequence of the government's decision to push ahead with its neo-liberal austerity program, so as to satisfy the IMF and other international financial institutions, such as the World Bank and the Asian Development Bank.
"As is happening in other Third World countries, the IMF is forcing Indonesia to accept an austerity program, which it hopes will work magic on the economic crisis", said Sari.
She said the loan conditions include instructions to privatise state enterprises, liberalise investment and trade rules and remove subsidies on fuel and other basic necessities — all moves which will deepen the country's economic and social crisis.
The FNPBI argues that the foreign debt — built up by Suharto and his cronies stealing from the people — should be cancelled. "The foreign debt makes up one-third of the total national budget and this is the main factor limiting the country's ability to recover", said Sari.
The government had intended to cut fuel subsidies in April, when it cut subsidies to electricity, fertiliser and other basic essentials. But it backed down at the last minute, fearful of the political backlash.
With the opposition movement growing, it looks unlikely the government will be able to proceed with plans to further cut the fuel subsidy next year.
"It's impossible for us to make the government reverse their policy through discussions. That's why we have to go to the streets", Dita Sari said. "We will continue to stage rallies tomorrow, the day after tomorrow and so on", she warned. Workers and students are preparing a national day of action on October 10.
BY PIP HINMAN