"The fuel price hike will push the price hikes of basic needs which could affect the livelihood of small people," Hatta said.Jakarta (ANTARA News) - Chief Economic Minister Hatta Rajasa said that the government would not be careless in raising domestic fuel oil prices because such a policy could cause economic distortions.
"One should not be hasty in raising it (fuel price) because it could cause distortions," Hatta Rajasa said here on Monday.
He among other mentioned an example of distortion such as high inflationary impact which would likely be difficult to control.
"The fuel price hike will push the price hikes of basic needs which could affect the livelihood of small people," Hatta said.
With regard to the planned cut in the consumption of subsidized fuel oil as of April 2011, Hatta said that there were studies conducted by the University of Indonesia (UI), the Bandung Institute of Technology (ITB) and the Yoyakarta University of Gajah Mada (UGM).
"The study is important for the government to see whether it would later be able to avoid distortions that could harm national economy.
Hatta said fuel oils have a major contribution to inflation and the commodity concerned involved the livelihood of many people.
"We want the subsidy to be used by the correct targets and there would be no leakage. The way to achieve this is to limit subsidized fuel consumption," he said.
He said if based on the universities` studies the fuel oil consumption limitation would have bad impact, the government could just cancel the implementation of the policy.
"You should not say that the government is inconsistent. We are thinking beings where all decisions are made for the goodness of us all," he said.
The minister of energy and mineral resources is scheduled to provide a presentation about the subsidized fuel consumption cut plan to the House in March.
According to him, the subsidized fuel consumption scheme will be the best alternative if certain conditions such as good preparation, leakage prevention and no distortion had been met.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2011
