Indonesian Vice president Jusuf Kalla said on Wednesday that the government would hike the prices of subsidized oil by less than 30 percent.
"The hike will not exceed 30 percent in a bid not to increase people's burdens," the vice president told reporters on the sideline of a seminar at the Four Season Hotel in the capital.
On Monday, a cabinet meeting decided to raise the prices of subsidized-oil in a bid to secure the state budget from a pressure of mounting subsidies following the soaring global oil prices.
To reduce the social impact, the government would provide incentives for the low income group, he said.
Similarly, the vice president said that half of the funds resulted from the decrease of the subsidies would be allocated to the low income group.
So far, government subsidies on oil were enjoyed by high income group rather than by that of low income group, said Kalla.
"The price hikes are actually to transfer subsidies from the high income group to the low income group," he said.
Indonesia, the only Asia-Pacific OPEC member country, has increased subsidies on oil sector from 45.8 trillion rupiah (some 5.33 billion U.S. dollars) to 126.8 trillion rupiah (about U.S. 13.85 billion U.S. dollars) due to the skyrocketing oil prices.
The government seems to act prudently in deciding how much the hike is, as this is a sensitive issue in the country which will hold a direct presidential election next year. Too high hikes could affect the government popularity.
In May 1998, a huge rise in fuel prices triggered rioting that helped topple former president Suharto.
Source:Xinhua
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