Indonesia: Fuel price to throw 15.7 million more into poverty

Statement by National Front of Indonesian Labour Struggle (FNPBI): The SBY-JK government's latest fuel price increase has led to a rise in transportation cost and prices of basic goods - even while indicators of people's welfare, such as income levels and purchasing power, are declining. According to some economic analysts, the 30% fuel price rise will increase inflation rate from 8.33% to 10.6%. The Institute of Study for Mining and Energy Reform predicted that the 30% fuel price increase will probably throw 15.68 million Indonesians into poverty.

The Indonesian Entrepreneurs Association, APINDO, has stated that it can no longer adjust wages to face fuel price rise. Entrepreneurs have only agreed to add transportation and meal support. However, economic burden is not only about transport and meal, more than those!
Indonesian labour is currently facing several challenges: First, the current wage policy is not keeping up with price increases. Second, the national industries, which both entrepreneurs and labours depend on, have suffred a tremendous hit from the fuel price increase decision. Under these conditions, there is no choice but to fight to cancel fuel price increase and to rescue our national industries.
On June 24, the Parliament decided to exercise its right to launch an inquiry into the national oil and gas industries. However, two political parties, Golkar and Demokrat, rejected the inquiry, thus revealing their true character as puppets of foreign corporations. Political and financial institutions such as USAID and World Bank are behind this government. In 2001, these institutions used large amount of aid to change our oil and gas legislation. Golkar and Democrat Party are complicit in liberalizing our economy policy!
In relation to the parliamentary inquiry, labour should assert that; first, the legislature should push the government for the immediate cancellation of fuel price rise. This measure needs to be accompanied by the passing of a decree to nationalize foreign-controlled mining and energy industry in order to supply domestic energy demand. The government could also increase royalty tax up to 40% for foreign contractors so that windfall profit can be used to maximise national income and overcome state budget deficit.
Second, legislature should commit to solving the enduring problem of satisfying our nation's oil and gas industry needs by instituting a system to control our nation's entire natural resources. The management and marketing of these sectors must prioritize our nation's needs. Therefore, the legislature should withdraw Law 22/2001 on Oil and Gas and Law 25/2007 on Foreign Investment.
Third, the state's endeavours to extract maximum profit from oil and gas sector needs to be followed by the transfer of that profit to education, health care, subsidy for basic needs, and national minimum wage standard.
Up to now, the Indonesian government has shown no resolution to protect regarding energy and mineral (mining rights) against foreign companies. Using the lack of capital and technology as pretext, the government has handed over the right to manage energy and mineral resources into the hands of foreign companies, without considering such concepts as transfer of technology and autonomous economic system.
Labour has a strong interest in the state-management system of oil and gas industry for the development of national industries. High productivity of national industry would also strengthen the position of national labour. But this is only if our economy has been released from the grip of neo-liberal economics.
Therefore, FNPBI makess the following demands:
1. Cancel fuel price increase.
2. Nationalize mining and energy industries and abolish foreign debt.
3. Cancel or rewrite all contracts with foreign energy and mining companies in such a way as to benefit the people and domestic industries by attaching clauses that maximize benefit, technology transfer, and royalties and making the prioritisation of national needs an obligation.
4. Develop national industries, especially the oil and gas industry, petrochemical industry, natural resources management, etc.
5. Release the detained student activists and civilians! Investigate the death of Maftuh Fauzi.
6. Break with the political elites that take side with foreign interests, parties that support fuel increase and reject inquiry right against SBY-JK government (Golkar and Demokrat)!
7. To improve labour welfare. implement national minimum wage standard based on aproper living standard.
8. Build a National Front that involves all people and political parties that are against the political elites who support foreign interests.

For new economic system!
Jakarta, June 28, 2008
National Front of Indonesian Labour Struggle

Source: Papernas