Indonesia: fuel price protests at high-handed government
The Indonesian government’s decision to slash fuel price subsidies has sparked predictable protests, the latest in a recent series of such events around the world. Student groups and labour unions are among those protesting, with many calling for a minimum wage increase. Protesters accuse the government of being preoccupied with attracting foreign investment for grandiose development projects at the expense of people’s wellbeing. As part of its strategy, the government intends to limit environmental protections, labour rights and people’s right to protest. The government should instead open up spaces for participation and debate, not least to develop alternatives to fuel subsidies consistent with tackling climate change.
The protests were predictable. Around the world, whenever the prices of fuel and other essentials have gone up, people have come out onto the streets to protest. A year of soaring fuel prices has seen numerous such outbursts of public anger, including in Ecuador, Kazakhstan and Panama, to name but a few.
So when Indonesia’s government slashed fuel subsidies this September, it should have known what to expect.
A sudden subsidy cut
Government subsidies have long enabled Indonesians to buy fuel at well below market rates. Before the subsidy cut, people paid about half the price they’d pay without subsidies.
Most of the production of the state-owned oil corporation Pertamina goes to domestic consumption, while declining domestic production has made Indonesia a net importer of oil. High global oil costs left the government complaining its subsidies budget had tripled, leaving it with no other option. Its solution was a subsidy cut that saw fuel prices immediately increase by around 30 per cent.
Indonesia’s government seems intent on continuing to hand down economic and political decisions with little consultation or scrutiny – and expects to get away with it.
The government tried to cushion the blow by increasing some welfare payments, including direct cash payments to poorer households. But people complained this didn’t adequately compensate for higher prices. Protesters accuse the government of failing to take account of the continuing economic impacts of the pandemic on Indonesia’s many low-income people: just when people felt their lives were getting back to normal, along came another shock, and this time of the government’s own making. Polls before the decision was announced showed almost 80 per cent of Indonesians opposed any subsidy cut.
Around 10 per cent of Indonesians – 27 million people – live below the poverty line, and already higher fuel prices are pushing up the cost of other essentials. While prices are going up, wages remain static, leading many protesters to demand a minimum wage increase.
A predictable response
The response to the most recent price increase was no different to previous ones. A subsidy cut made in 2014 brought similar protests, while earlier this year students protested when the price of cooking oil increased, causing the government to introduce a temporary ban on palm oil exports.
From 6 September onwards, thousands took to the streets of the capital, Jakarta, and other cities across Indonesia’s vast territory. As is often the case in Indonesia, students were to the fore. Conservative Muslim groups and trade unions also took part. In the city of Surabaya, protesters staged a procession of thousands of motorcycles, the basic transport many rely on. Drivers of low-cost taxis went on strike.
Some protesters burnt tyres and blocked roads. But while protests have mostly been peaceful, police have used some heavy-handed tactics: teargas and water cannon were used in the city of Bengkulu, and several protesters were detained in the city of Pematangsiantar. In the Jakarta area alone, around 7,000 police were deployed.
As the protests went on, the government met with workers’ groups and agreed to review minimum wages. A nationwide strike may still be in prospect unless there are further developments.
A high-handed government
The government says the money it spends on keeping fuel prices down would be better used for developing infrastructure. But how much this would benefit the people worst hit by the subsidy cut isn’t clear. President Joko Widodo has long been accused of focusing on grandiose development projects, such as his plan to build a completely new capital city. Many protesters want to see more attention paid to their everyday concerns, and above all to jobs and wages.
Widodo has made clear that attracting more foreign investment is his number one goal. In 2020 the government pushed through unpopular changes to labour laws as part of a wide-ranging omnibus law that made all kinds of changes with little scrutiny. The so-called Job Creation Law removed a raft of environmental regulations and labour rights protections, on the grounds of attracting foreign investment that would supposedly create jobs.
But opponents were concerned about the quality of those jobs, which international experience suggests would be low-paid and minimally regulated, with the removal of labour rights giving workers few opportunities to demand better.
The coalition against the new law was broad, encompassing unions, environmental groups, Indigenous and land rights movements, faith networks, student organisations and many academics. Even some international investors criticised the law. But protests against the changes were met with brutal violence.
The omnibus law was pushed through with little parliamentary debate, but civil society brought a Constitutional Court challenge. In November 2021 the court ruled that the law was unconstitutional due to procedural flaws, which must be remedied within two years for it to take effect. The government was instructed to undertake more public consultation on the law – the scrutiny it had tried to avoid.
But scepticism understandably prevails about how meaningful consultations may be. Protesters continue to be violently repressed. Activists – particularly those calling for the independence of the Papua region – face harassment and criminalisation. In November 2021, a government official reported two Greenpeace Indonesia activists to the police merely for criticising Widodo’s environmental policies.
Proposed changes to the Criminal Code – again being made through an opaque process – contain broad provisions to further criminalise peaceful protests and criticism of the government. Indonesia’s government seems intent on continuing to hand down economic and political decisions with little consultation or scrutiny – and expects to get away with it.
Lack of climate leadership
Indonesia’s heavy-handed government doesn’t seem particularly serious about climate change either. The 2021 COP26 climate change summit ended with a commitment – albeit watered down at the last minute – to phase out fossil fuel subsidies. Subsidies need to be eliminated as part of the transition from deadly fossil fuels to renewable energies. Indonesia is one of the world’s top 10 greenhouse gas emitters and transport is a major contributor, along with the country’s reliance on coal power.
But the transition should be just. To be just, it needs to provide alternatives to current practices. Most Indonesians don’t have any other option than the petrol-powered vehicles that get them to work every day. Only the wealthy can ride out the subsidy cuts without experiencing negative impacts.
It wasn’t climate concerns that motivated the Indonesian government to cut subsidies, but budgetary worries. There’s no hint of climate leadership or a sound plan for alternatives. At COP26, Indonesia moved to distance itself from the climate agreements it had just supposedly supported, saying economic growth must come before climate action.
Indonesia will be hosting the G20 summit of the world’s major economies this November. If the protests continue, they will potentially embarrass President Widodo, who has already seen his approval ratings fall in reaction to the subsidy cut.
The G20 summit provides an opportunity for partner states and civil society to urge the Indonesian government to show climate leadership and prepare a long-term plan for alternatives to fuel subsidies that doesn’t penalise the poorest – and use that as the basis to seek international investment.
The government also needs to show it’s prepared to listen to popular anger and address people’s concerns. It must demonstrate more tolerance of dissent and more willingness to consult on its decisions. A greener, more equal Indonesia is possible, but will require a determination to open up spaces for participation, dialogue and critique.
OUR CALLS FOR ACTION
The Indonesian government should consult with a broad range of civil society to develop a long-term plan on alternatives to fuel subsidies.
The government must refrain from violence against protesters and revisit laws that criminalise dissent.
The government must revise the legislation that reduces environmental protections and labour rights, in consultation with civil society.
Cover photo by Robertus Pudyanto/Getty Images