High fuel prices hurting Indonesia’s poorest

May 30, 2008

JAKARTA, Indonesia  (AP) _ Warusan sprawls at the bow of his boat, idle after spending hours scrounging for fuel. Normally, his daily catch would keep him busy. But now the fisherman’s eyes fall to his engine, where a bottle once filled with diesel hangs empty.

Indonesia is Southeast Asia’s largest oil producer, but its inability to meet even domestic demand due to aging wells and declining investment forced it to decide this week to quit the Organization of Petroleum Exporting Countries.

Days earlier, the government slashed fuel subsidies to avoid a budget blowout. Soaring oil prices are affecting countries around the globe, but Indonesia has for decades helped cushion the cost to protect the poor in the country of 235 million.

Prices at the pump jumped nearly 30 percent overnight, as did the cost of cooking fuel. Warusan and others living on the brink are already feeling the impact.

The 25-year-old fisherman has struggled to find the precious diesel that powers his wooden vessel. This week, he and his three crew members were paying $16 to fill up their tank and then splitting their $3 profit at the end of the day.

“The government has to have pity on people like us,” Warusan said, noting that fuel hikes have pushed up the cost of basic commodities such as rice, tofu and eggs. “We’ve been working very hard. I don’t think they are thinking about us commoners.”

To stave off massive street riots like those that quickened former dictator Suharto’s downfall after he slashed subsidies in 1998, the government is offering $10 a month to the country’s 19 million poorest families.

The $1.5 billion aid package will extend until shortly after presidential elections next July.

But Wardah Hafidz, of the local development organization the Urban Poor Consortium, said Friday that the handouts were nothing but a quick fix.

“The government is trying to improve its image in the eyes of the people, but it’s deceiving them,” she said, adding that the poor have not yet recovered from the last massive fuel price hikes in 2005. “This latest increase is a fatal blow to them.”

Residents living in ramshackle homes set up under an overpass in northern Jakarta were trying to find ways to make their meager incomes stretch further. Some were cutting back on food, while others stockpiled wood for cooking or rode bikes to work instead of taking the bus.

“We’re lucky if we can feed our children,” said Kartini, a vegetable seller, noting that the cost of garlic, for example, had doubled in the last week. The 48-year-old mother of eight said she had hoped democracy would bring improvements, but “it’s getting worse now.”

Many of the country’s poor say the government’s cash handouts do not come close to meeting their needs – if they reach them at all.

Akhmad Hidayat, a 51-year-old neighborhood chief who earns his living as a security guard, said that to be eligible for assistance, a family must prove monthly wages of less than $65 and a residence that lacks ceramic tiles and a toilet.

“In the past, I ate three times a day. Now maybe I will eat only twice,” he said. “And then, maybe only tofu.”

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed