"The increase in subsidized fuel oil prices in the run-up to the fasting month and post-fasting holiday of Lebaran has a significant impact on inflation," Salamudin Daeng of Indonesia for Global Justice said here on Saturday.
Based on data from the Central Bureau of Statistics (BPS), inflation has reached 3.29 percent but, in fact, inflation in the field has exceeded that figure, he noted.
He added that Indonesia`s import policy had been implemented by the government because the country`s agricultural sector and its production were weak.
"Around 70 to 80 percent of raw materials at home are imported. Imports can temporarily meet domestic needs. However, it could ruin the sources of life in the long run," he said.
He pointed out that imports could reduce a large amount of foreign exchange. "Our capital outflow reaches Rp800 trillion. If the government fails to obtain loans, the local rupiah currency will continue to face pressures," he added.
Salamudin said that the problem caused the agricultural sector to become sensitive. Agriculture is the main pillar of the nation`s food production.
"It all began when the government revoked its agricultural subsidy policy in 2004 and introduced a policy providing discretion to foreign investment. Besides, foreign investors were also allowed to own the majority stake in banks," he said.
(KR-BSR/O001)
Editor: Jafar M Sidik
Copyright © ANTARA 2013
