Indonesia hikes fuel prices by 30%, cuts energy subsidies

Sep 3, 2022, 4:51 AM | Updated: 6:06 am
Motorists queue up to fill up their tanks after the government announced an increase in fuel prices...

Motorists queue up to fill up their tanks after the government announced an increase in fuel prices, at a gasoline station in Jakarta, Indonesia, Saturday, Sept. 3, 2022. Fuel prices increased by about 30 percent across Indonesia on Saturday after the government reduced some of the costly subsidies that have kept inflation in Southeast Asia's largest economy among the world's lowest. (AP Photo/Tatan Syuflana)

(AP Photo/Tatan Syuflana)

JAKARTA, Indonesia (AP) — Fuel prices increased by about 30% across Indonesia on Saturday after the government reduced some of the costly subsidies that have kept inflation in Southeast Asia’s largest economy among the world’s lowest.

Indonesians have been fretting for weeks about a looming increase in the price of subsidized Pertalite RON-90 gasoline sold by Pertamina, the state-owned oil and gas company. Long lines of motorbikes and cars snaked around gas stations as motorists waited for hours to fill up their tanks with cheaper gas before the increase took effect on Saturday.

The hike — the first in eight years — raised the price of gasoline from about 51 cents to 67 cents per liter and diesel fuel from 35 cents to 46 cents.

President Joko Widodo said the decision to increase the fuel prices was his last option as the country’s energy subsidy had tripled this year to 502 trillion rupiah ($34 billion) from its original budget, triggered by rising global prices of oil and gas.

“The government has tried its best as I really want fuel prices to remain affordable,” Widodo told a televised address announcing the fuel hike. “The government has to make decisions in difficult situations.”

He said that the flow of subsidies to the public was not well targeted — about 70% of subsidies were benefiting middle and upper classes — and the government decided instead to increase social assistance.

Finance Minister Sri Mulyani Indrawati said authorities were monitoring the impact on inflation and economic growth of the rise in fuel price.

Inflation has been relatively modest with the shock being mostly absorbed through a budget bolstered by energy subsidies. Inflation hit 4.6% in August as Bank Indonesia, the central bank, has said it would reassess the inflation outlook in response to the government fuel price policy.

Indrawati said in a separate news conference that the government would provide 150,000 rupiah ($10) cash handouts to cushion the impact of the fuel price increase on 20.6 million poor families until the year end. The total cost of the handouts will be 12.4 trillion rupiah, which will be reallocated from the budget for energy subsidies.

She said the government will also spend 9.6 trillion rupiah ($644 million) on salary assistance to about 16 million low paid workers, and 2.17 trillion rupiah ($145 million) will go to subsidizing transport costs, particularly for motorcycle taxi drivers and fishermen.

“We hope this can reduce pressure of rising prices and help reduce poverty,” Indrawati said.

The government has subsidized fuel for decades in Indonesia, the vast archipelago nation of more than 270 million people.

Fuel prices are a politically sensitive issue that could trigger other price hikes and risk student protests. In 1998, an increase in prices sparked riots that helped topple longtime dictator Suharto.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

NC Senate candidates to meet in likely only televised debate

RALEIGH, N.C. (AP) — The two major-party candidates seeking to succeed retiring North Carolina Republican Sen. Richard Burr are meeting for what is likely their only televised debate. Democrat Cheri Beasley and Republican Ted Budd agreed to a one-hour debate being held Friday night at a cable television studio in Raleigh. Budd is a three-term […]
23 hours ago
Jordan Cromer cleans water-logged items at his home, Tuesday, Oct. 4, 2022, in North Port, Fla. Res...
Associated Press

Hurricane Ian floods leave mess, insurance questions behind

NORTH PORT, Fla. (AP) — Christine Barrett was inside her family’s North Port home during Hurricane Ian when one of her children started yelling that water was coming up from the shower. Then it started coming in from outside the house. Eventually the family was forced to climb on top of their kitchen cabinets — […]
23 hours ago
Attorney Chris Mattei displays a video during his closing statements in the Alex Jones Sandy Hook d...
Associated Press

EXPLAINER: Jurors weigh cost of Alex Jones’ Sandy Hook lies

WATERBURY, Conn. (AP) — For a decade, the parents and siblings of people killed in the Sandy Hook Elementary School shooting have been tormented and harassed by people who believe the mass shooting was a hoax. How do you put a price tag on their suffering? That’s part of the task faced by a Connecticut […]
23 hours ago
FILE - Suffolk County Congressman Lee Zeldin listens as he prepares to participate in New York's Re...
Associated Press

GOP steps up crime message in midterm’s final stretch

NEW YORK (AP) — The graphic surveillance video shows a man on a sidewalk suddenly punching someone in the head, knocking them to the ground. With muted screams and gunshots in the background, the video stitches together other surveillance clips of shootings and punching on streets and subway trains as a voiceover says, “You’re looking […]
23 hours ago
Javier Diaz poses for a photo next to his home that was destroyed by Hurricane Ian in La Coloma, in...
Associated Press

10 days later, Cubans still recovering from Hurricane Ian

LA COLOMA, Cuba (AP) — Soldiers fix roofs and raise power poles under a blazing sun, while teachers salvage wet school books and residents cook over wood fires in La Coloma, a fishing and industrial town on Cuba’s coast that took the brunt of Hurricane Ian. Ten days after the storm left still unquantified devastation […]
23 hours ago
FILE - A sign advertises for help The Goldenrod, a popular restaurant and candy shop, Wednesday, Ju...
Associated Press

US hiring likely slowed last month (which may be good news)

WASHINGTON (AP) — The piping-hot U.S. job market may be cooling off, if only slightly. But what business managers, policymakers, investors and economists want to know is this: How cool would be cool enough for the inflation fighters at the Federal Reserve to begin to ease their aggressive interest rate hikes? The government’s jobs report […]
23 hours ago

Sponsored Articles

Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
Indonesia hikes fuel prices by 30%, cuts energy subsidies