Indonesia parliament votes against fuel price hike

Indonesia's parliament rejected Saturday a plan to hike the heavily subsidised fuel price by a third, instead voting in a law that would allow future hikes if global oil prices rise further. "There will not be a hike in the fuel price in the near future," house speaker Marzuki Alie told parliament. It had been widely expected that parliament would approve the hike from Rp 4,500 (49 cents) a litre to Rp 6,000 to ease pressure on its budget as global oil prices soar above $100 a barrel. The government said the country could not afford the fuel subsidies that ate 11 percent of the state budget in 2011, arguing that without the price hike the budget deficit would surpass the three percent of GDP cap stipulated by law. But its plan was stymied when the country's second-largest party and key coalition member Golkar voiced last-minute opposition Thursday night, following weeks of almost daily protests attended by tens of thousands of disgruntled Indonesians nationwide, some of which took a violent turn. The leading Democratic Party had sought the passage of a law stating the government could hike the price if Indonesian crude oil prices, which fluctuate in line with global oil prices, stayed above five percent of a pegged $105 a barrel for 30 days. After deliberations went past midnight, parliament voted 356 to 82 to pass a similar law that widened the five percent margin to 15 percent, and extended the 30-day period to six months. That new margin makes it impossible for the government to hike the fuel price in the near future. The government had hoped to hike the price Sunday. Around 10,000 Indonesians rallied in the capital, including outside parliament as lawmakers continued debating. The fuel hike option voted in early Saturday morning was put forward by the Golkar Party, which had earlier supported the 33 percent hike. "At first the Golkar party was understanding of what the government proposed. But after people made some noise, we were reminded of what they want and made some reviews," Golkar parliamentary deputy head Ahmadi Noor Supit said during the early hours of deliberations Friday. For weeks the Democratic Party had presented a united coalition on the plan, but member parties softened their positions following protests.