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Indonesia To Raise Fuel Prices Despite Protests

Policemen were deployed to guard fuel stations across the country, where cars and motorbikes lined up Friday evening to buy fuel under the old prices. The government has ordered all stations to be open around the clock.

Aviliani, a noted economist, applauded the move, saying the subsidies have put pressure on the country's trade and current account deficits as well as local currency.

"It will result in inflation and increase of other prices, but on other hand it will make Indonesia more attractive to foreign investors," said Aviliani, who uses a single name.

She urged the government to control prices of staple goods and the value of the rupiah currency.

To try to minimize protests, 10 mobile phone companies plan to text about 240 million cellular users to explain why fuel prices are being increased, said Gatot S. Dewabroto, the spokesman at the Ministry of Communication and Information.

He quoted one message as saying: "Fuel subsidies are not well targeted. They are being enjoyed by the rich and have created injustice."

A public information bulletin will be published in newspapers laying out the government's arguments, said Dewabroto. It notes, for example, that Indonesia's fuel prices are lower than seven neighboring Southeast Asian countries and explains that the country once was able to produce enough oil to satisfy domestic consumers but now must import fuel to meet skyrocketing demand as millions of news cars and motorbikes hit the streets each year.

The government has subsidized fuel for decades in Indonesia, where about half of the 240 million people survive on $2 a day. In 1998, increased prices sparked rioting that helped topple longtime dictator Suharto.

Last year, Parliament rejected a similar plan to raise fuel prices. But Yudhoyono was able to push the deal through this time despite opposition from some parties, with a vote of 338 to 181 supporting the measure, a year before the next presidential election.


Associated Press writer Niniek Karmini contributed to this report.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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