Indonesia's president-elect Joko Widodo to hike fuel prices in November, adviser says
Updated about 7 hours agoMon 20 Oct 2014, 10:05am
Indonesia's president-elect Joko Widodo plans to raise the price of subsidised gasoline and diesel by about 50 per cent within two weeks of taking office, a move that will save the government more than $14 billion next year, an adviser to Mr Widodo says.
Mr Widodo, who will take over the presidency of South-East Asia's largest nation on Monday, is under pressure to reduce a budget deficit inherited from the administration of the outgoing president, Susilo Bambang Yudhoyono.
The aide said Mr Widodo aimed to raise the price of both gasoline and diesel by 3,000 rupiah ($0.28) per litre by November.
Indonesian fuel prices are among the cheapest in the region, with gasoline costing 6,500 rupiah ($0.61) per litre, and diesel costing 5,500 rupiah ($0.51) per litre. (RP6500 = RM1.77)
"The plan is [for] November 1 ... but it's safe to say they are likely to do it within the first two weeks of taking office," said the adviser, who requested anonymity because he was not authorised to speak to the media.
The adviser said Mr Widodo, known by his nickname Jokowi, could still decide to "change his mind" on the fuel price hike at the last minute.
Elected in July, Mr Widodo hoped a politically unpopular fuel price hike would be imposed before he took the reins, but president Yudhoyono denied the president-elect's request in August.
The incoming president lacks a parliamentary majority, making it harder for him to push through measures, but parliament's approval is not needed to increase administered fuel prices.
To offset the higher fuel prices, Mr Widodo plans to provide the poorest families with 300,000 rupiah ($27.94) per quarter until the first quarter of 2016, the adviser said. And Mr Widodo will consider whether to raise fuel price again in the fourth quarter of 2015, the adviser added.
The government is expected to save 156 trillion rupiah ($14.4 billion) next year in fuel subsidy costs, the adviser said.
Mr Widodo's advisers said the money saved would be diverted to spending on infrastructure, agriculture, education, and health projects.
Mr Widodo, who is from a humble background, has put forward an ambitious reform agenda that includes reviving South-East Asia's top economy, and improving healthcare and education.
The 2014 budget deficit has been targeted at 2.4 per cent of gross domestic product, but is in danger of busting a budget law setting the limit at 3 per cent because of a shortfall in tax revenues and the slowest economic growth in five years.
Prabowo meets Jokowi, offers congratulations
Meanwhile, Indonesia's losing presidential candidate Prabowo Subianto said his party would support Mr Widodo, but would not hesitate to criticise any of his policies that they opposed.
Mr Prabowo met with Mr Widodo for the first time publicly since the former Jakarta governor was declared the winner of Indonesia's July 9 presidential election, the closest ever.
The comments from Mr Prabowo, who leads the opposition coalition that controls parliament, should help ease concerns from Indonesian and foreign investors of political gridlock.
"I conveyed that the party I lead, my supporters, I will ask them to support Joko Widodo and the government he will lead," he told reporters after their meeting in Jakarta.
"When there are things that we judge to be not for the benefit of the people ... we will not hesitate to criticise."
Mr Widodo welcomed Mr Prabowo's willingness to criticise policies he disagreed with.
"A balance in the management of the country is very important. There are some who execute, some who control, and some who criticise. I see that as a good thing."
Despite speculation about whether Mr Prabowo would attend Mr Widodo's inauguration on Monday, the ex-general said he would try his best to be there.
Following today's press conference, Mr Prabowo congratulated Mr Widodo and saluted him.
Mr Prabowo had initially refused to accept the result of the July poll, alleging widespread fraud and vote rigging. He launched a bid to overturn the result in the Constitutional Court but was unsuccessful.
"Our objectives are the same ... everything will be done for the good of the nation," Mr Widodo told reporters.
Indonesia's main stock index rose nearly 1 per cent by midday after the news of the meeting and the proposed fuel price rise hit the market.
"There is optimism after Joko Widodo and the opposition parties started to show more constructive communication," said Norico Gaman, head of research at BNI Securities.
"He [Widodo] is trying to show the market that there is some semblance of political stability in the country."
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