Fuel Prices Should Rise Rp1000

Economic observer Chatib Basri figures that the ideal prices for subsidized premium fuel will be Rp 1,000 per liter.

"The increase in fuel prices is common in Indonesia's history. And it proves that the Indonesian economy bears up," he said on Wednesday.

According to Chatib, the designated price rise is mostly applicable considering the pressure put toward the State Budget. He calculated that the increase will only affect inflation by 1.4 percent. If the government maintains fuel prices at the current level, the subsidy will likely double by Rp 200 trillion, given the assumed world oil prices of US$120 per barrel.

This year, the government sets the Indonesia crude price at US$80 per barrel.

More subsidies allocated for fuel will in turn upset the budget shared for reducing poverty and developing infrastructures.

He cited previous situations in the past which drove the Megawati and Yudhoyono administations to revise fuel prices.

"Megawati remained in her office after fuel prices were revised. SBY [Susilo Bambang Yudhoyono] was re-elected [although fuel prices were revised]," he said.

source : vivanews.com