‘Gray’ fuel policy may put investors in limbo

JAKARTA. The latest decision made by the House of Representatives regarding fuel prices may lead to multiple interpretations from the business world, an economy expert says.

Institute for Development of Economics and Finance (INDEF) executive director Enny Sri Hartati said on Saturday that investors needed clear policies from the government to calculate their business strategies. On the contrary, prolonged debates among lawmakers unable to determine the subsidized fuel price hike, as shown during yesterday’s plenary session, could create business uncertainty.

“The ‘gray decision’, not to mention the drama within its process, will cause uncertainties among economists and investors. The government and the House should have known that those people need a firm policy to calculate their business [outlook],” Enny told reporters in Jakarta.

She cited that the latest decision, which allows the increase of subsidized fuel prices if the country’s crude price is 15 percent higher than assumed in the state budget within six months, might boost inflation rates.

According to INDEF, the political unrest and fuel policy uncertainties could push the inflation rate to 8 percent for the rest of the year.

“The government should muffle these uncertainties, because politicizing our economy will create instability, which in the end will hurt society,” she said.

As many as 356 lawmakers agreed to revise the 2012 state budget, allowing the government to increase subsidized fuel prices if the Indonesia Crude Price is 15% higher than assumed in the state budget within six months, while 82 House members were against the policy. Another 93 lawmakers from the People’s Conscience Party (Hanura) and the Indonesian Democratic Party of Struggle (PDI-P) walked out just before voting finally began.

The decision means that there will be no immediate subsidized fuel price increase.

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