26 February 2020 (closed)
USD/IDR (14,234) +216.00 +1.54%
EUR/IDR (15,641) +350.19 +2.29%
Jakarta Composite Index (5,688.92) -98.22 -1.70%
Late on Monday evening (17/06), the increase in the price of subsidized fuel, as stated in Law No. 19/2012, was approved by Indonesia's House of Representatives (DPR) through a voting session as political parties could not agree collectively on the price hike as well as on cash programs for the poor to mitigate effects of the higher fuel price. Demonstrations against the price hike were staged in various regions. In Medan (North Sumatra), Jambi (Central Sumatra) and Ternate (North Moluccas), it led to clashes between the police force and protestors.
The voting process was joined by 519 members of the DPR. Of these members, 338 agreed with the price hike, while 181 members rejected it. The five parties that approved the new policy involved the Democratic Party, Golkar, PAN, PPP and PKB. Parties that rejected consisted of the PDI-P, PKS, Gerindra and Hanura.
It is reported in Indonesian media that the price of subsidized fuel will be raised this week after the government is finished with administrative matters. The price will be elevated by 44 percent.
The issue of the subsidized fuel price hike has been ongoing for many months. The Indonesian government spends a large portion of its subsidy budget on fuel subsidies. But due to robust and increasing fuel demand in combination with Indonesia's declining oil output, it has resulted in expensive oil imports that seriously burden the government's current account. The downside of raising the price of subsidized fuel is that it will trigger high inflation and social unrest.