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Indonesia To Raise Utility Costs

May 4, 1998

JAKARTA, Indonesia (AP) _ Thousands of cars packed gas stations across the country Monday to fill up their tanks before government-ordered price hikes swipe another slice of Indonesians’ already-pinched earnings.

Police took up positions at some stations to keep the lid on public anger following the government’s decision Monday to roll back subsidies that have long defrayed the costs of everything from fuel to bus fares.

The move fulfills Indonesia’s promise to the International Monetary Fund, which is holding the pursestrings for a $43 billion bailout package. But President Suharto’s government is in a very uncomfortable spot _ caught between pledges to impatient overseas lenders and Indonesians staging protests over inequities in the country’s faltering economy. Student leaders on Monday vowed to intensify near-daily demonstrations aimed at bringing down Suharto.

``Life has become more difficult, and people here are becoming poorer,″ said Edi Joko, a car salesman. ``The power holders just relax since they have more resources than people like us.″

In cities and provincial towns throughout Indonesia on Monday, thousands of cars clogged the streets to buy fuel before the 71-percent increase takes effect Tuesday. Traffic jams in Jakarta, the capital, stretched for dozens of blocks. Some gas stations ran empty.

``I’ll stay until my tank is full, even if I have to wait for hours,″ said Imam, a motorist waiting at a gas station near the presidential palace.

Aside from the gas hikes, kerosene will become 25 percent more expensive starting Tuesday, said Minister of Mines and Energy Kuntoro Mangkusubroto. City bus fares will go up as much as 67 percent, and train and ferry tickets also will rise nationwide.

Electricity prices will jump by 20 percent later this month, with further increases in August and November, Kuntoro said.

The announcement is sure to please IMF officials, who have been adamant about a thorough overhaul of the economy in the face of hemming and hawing by Indonesian officials. In fact, IMF director Michel Camdessus said in Singapore on Monday that he has proposed that the IMF board, scheduled to meet later in the day, restart disbursement of aid to Indonesia, a largely Muslim country of 200 million people.

The United States also was encouraged. ``We hope they will continue and consolidate this progress,″ Stuart Eizenstat, U.S. Assistant Secretary of State for Economic Affairs, said in Washington. ``There seems to be increased seriousness in implementing the package.″

For rank-and-file Indonesians, however, the price cuts are the latest painful reminder that their once-rising standard of living is only falling these days.

``I need three cans of kerosene a day,″ said Muhamad Sidi, a 42-year-old food vendor. ``It’ll mean trouble for me because my income is not going up, it’s going down.″

University students said in interviews they would step up demonstrations against Suharto, the 76-year-old former army general and president for more than three decades. In sometimes violent rallies, they have demanded Suharto’s ouster and a lowering of prices of basic commodities. Prices have soared in recent months in response to the plunge in the country’s currency, the rupiah.

``Suharto does not consider the reality of people suffering because of the crisis,″ said Faizil Assegaf, organizer of a protest Monday at Mercu Buana University in Jakarta.

Police fired tear gas Monday at rock-throwing protesters on campuses in Medan and Palu. At least 30 students were injured in Palu, the official Antara news agency reported. The protests had been scheduled before the announcement of the price hikes.

About 200 students gathered late in the day at a campus in the city of Surabaya. ``Bring down the prices,″ they shouted.

Peaceful rallies were held in Jakarta, Yogyakarta and other cities.

Eizenstat urged the Indonesian government to respect the protesters’ right to demonstrate. ``We have cautioned restraint and patience,″ he said.

Government officials had said previously they would drop subsidies gradually, and many observers had not expected the big jump in the price of gasoline, which will increase from about 36 cents a gallon to 60 cents a gallon.

Finance experts contend that if Indonesia is to right its economy, its needs to eliminate the subsidies that create economic inefficiencies. They also have been pushing Suharto to end the special treatment extended his family and friends.

Aid had been suspended because of worry that Suharto was dragging his feet on such politically tricky reforms.

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