Indonesia passes budget, paves way for fuel price hike amid protests

Indonesia's House of Representatives approved the 2013 draft revised budget in a plenary session late Monday after an uneasy, 12-hour process, paving the way for the government to raise subsidized fuel prices amid nationwide protests and clashes with police.

A total of 338 of 519 lawmakers attending the session expressed support for the budget, all from the governing coalition parties, while the remaining 181 opposed it -- 130 opposition lawmakers and 51 from the Muslim-based Prosperous Justice Party, which belongs to the coalition.

"During the deliberation (of the draft budget), there were sometimes differences in views among parliament members and the government. But this is a process of democracy," Finance Minister Chatib Basri said in his speech before the plenary session.

"A capacity to create justice makes democracy exist, a capacity to do arbitrary acts makes democracy needed," he added.

Some ministers in charge of economic affairs told journalists that following the approval by the 560-member House, President Susilo Bambang Yudhoyono will raise fuel prices within three days.

Protesting the planned fuel price hike, university students and workers staged protests across the country, resulting in some casualties.

In Jakarta, thousands of protesters took to the streets, rallying in front of the parliament building, Jakarta police spokesman Rikwanto said.

In the North Maluku provincial capital of Ternate in eastern Indonesia, five protesters and a journalist were injured after police fired rubber bullets at about 2,000 protesters.

Seven police officers were also wounded by stones thrown by the protesters, according to National Police spokesman Agus Rianto.

Rianto also said that in Jambi, the capital of Sumatra Island's Jambi Province, a television journalist was seriously injured after a broken piece of a tube of tear gas fired by police at the protesters hit him.

Under the approved budget, the government will cut the fuel price subsidy from 209.92 trillion rupiah (about $21.24 billion) to 199.85 trillion rupiah this year.

For the fuel subsidy cuts, low-income households will receive compensation that includes cash aid and rice for the poor and assistance for underprivileged schoolchildren.

Under the direct cash aid scheme, each of the 15.5 million low-income households will receive 150,000 rupiah per month for a period of four months, starting immediately when the cuts go into effect.

Following the House approval, the government will raise fuel prices, with subsidized premium gasoline going up 2,000 rupiah (20 cents) per liter and subsidized diesel fuel costing an extra 1,000 rupiah per liter.

The current price for both premium gasoline and diesel stands at 4,500 rupiah.

The huge fuel subsidy, which has burdened the state budget, has raised concerns about the sustainability of the budget and foreign exchange reserves as most of the fuel is imported.

Last week, uncertainties over the fuel price hike sent the rupiah to its lowest point since 2009. It was trading at 9,886 to the U.S. dollar Friday, but banks were selling the greenback at more than 10,000 rupiah. On Monday, the rupiah strengthened slightly to 9,881.