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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: manalagi who wrote (969)	7/12/2005 10:11:57 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24213

Indonesia energy crisis shows old habits die hard 12 Jul 2005 09:43:40 GMT By Dan Eaton JAKARTA, July 12 (Reuters) - Indonesian President Susilo Bambang Yudhoyono's efforts to tackle domestic fuel shortages show that, despite talk of reform, Southeast Asia's biggest economy is struggling to part with old ways. Swept to power on bold reform pledges, Indonesia's first directly elected president faces a tough choice between slashing popular fuel subsidies and stopgap measures, analysts say. "Everyone today claims to be with the reformist camp, and everyone sings the same anti-corruption tune," Endy M. Bayuni, editor of the Jakarta Post newspaper, wrote in an article published on Tuesday. "But as our attitude towards domestic fuel prices shows, we draw the line when it hurts our own interests." Yudhoyono, who took office last September, sent a strong signal this week that he would lead from the front by cancelling overseas travel in order to deal with the crisis, analysts said. But they also warned that a raft of measures taken so far -- from curbs on foreign exchange trading to telling government offices to switch off lights and ministers to shorten their motorcades -- would do little to improve the situation. At the heart of the problem are costly but popular fuel subsidies in the world's fourth most populous nation, the Asia Pacific's only OPEC member, that have ballooned amid soaring global oil prices and declining domestic production. Economists say Yudhoyono's administration, with its pledge not to raise fuel prices again this year, is fighting a rapidly expanding state budget and weakening rupiah currency with one hand tied behind its back. It's a battle, they warn, the former army general will find hard to win. The rupiah has lost over five percent against the dollar this year due in part to higher dollar demand for oil imports following soaring global prices. The currency was quoted at 9,775 per dollar late on Tuesday, compared to multi-year lows of around 9,900 last week. In recent weeks, shortages of some oil products and fuels led to long lines at petrol stations in parts of the country, where domestic crude oil production has declined, turning the OPEC member into a net importer last year. "Conservation is not the only answer. The government should concentrate on how to increase our crude oil production by creating a good climate for investors," said Kurtubi, who heads the Centre for Petroleum and Energy Economics Studies. He said the failure to reform and reduce the many costs for investors played a big role in the building energy crisis. "POLITICALLY EXPLOSIVE" State oil firm Pertamina's increasing dollar demand to finance imports saw the rupiah currency nosedive and authorities scramble to regain control by giving Pertamina access to dollar accounts at the central bank, among other measures. "At least the government is signalling the right attitude, but it's not going to solve the problem," said Fauzi Ichsan, an economist with Standard Chartered Bank, regarding government efforts to conserve oil and strengthen the rupiah. A prominent Jakarta-based foreign economist, who declined to be identified, was more blunt. "Up until now they haven't addressed the fundamental problem. They addressed it a little bit with a courageous step earlier this year raising fuel prices by 29 percent, but international prices rose in tandem, so they are back where they started," he said. Jakarta raised domestic fuel prices by an average of 29 percent in March, without sparking the widespread mass street protests many pundits had forecast. Another rise this year could be difficult. "To raise domestic fuel prices again now would be politically explosive," said Standard Chartered's Ichsan. But others speculate that the flurry of energy conservation measures and the highly publicised decision by the president to postpone his travels may be an effort to soften up the public for just such a rise alertnet.org