BY MAX LANE
There have been student demonstrations, involving hundreds of students, in Jakarta, Bandung, Surabaya, Makassar, Denpasar and Jogjakarta against the fuel price increases announced by the Indonesian government on January 16.
In the city of Makassar, there were clashes with the police after students hijacked a state oil company tanker.
President Megawati Sukarnoputri's government has raised petrol prices by 6.9% and kerosene prices by a massive 50%. This will have a devastating effect on the standard of living of Indonesia's 200 million poor workers and peasants. Kerosene stoves are still used by the big majority of the population, not just for cooking but for the necessary boiling of drinking water.
The price increases flow from a decision by the government to reduce subsidies for all energy products. Electricity prices are also scheduled to rise soon. The International Monetary Fund has demanded Jakarta reduce fuel subsidies as a means of lowering budget expenditures thereby making it more feasible for the government to meet its obligations to pay outstanding interest on old loans.
The IMF has also pressed the government to decrease regulation of the rice market. This has meant both lowering tariffs on imported rice as well as reducing the role of the Logistics Agency in managing rice distribution to the markets. As a result, there has been dumping of cheap rice on the market, undercutting local rice and therefore discouraging local production.
Cultivation of rice land decreased 10% during 2001 and rice harvests have also been down as a result of farmers using less fertiliser. Fertiliser prices have also doubled since 1999 just as rice prices have been squeezed.
At the same time, because there is no longer centralised management of rice distribution, rice from different provinces which are harvested at different times has not been made available to areas where there has been no harvest. As a result, there rice prices in the latter areas have jumped between 30% and 100%.
The uncertainty in the price of rice has promoted hoarding by traders. In the rice bowl of Java, people now queue for cheap overseas rice distributed as part of a "rice for the poor" program. The distribution of this rice, however, takes the form of a lottery as "rice for the poor" trucks visit different neighbourhood areas. The Logistics Agency has also stated that its current rice stocks are insufficient to meet future demand.
From Green Left Weekly, January 23, 2002.
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