Top economist sees fuel price hike as "excessive"

The government's move to boost fuel prices at home by an average of more than 126 percent is "excessive" as it is beyond the public's capacity, University of Indonesia top economist Faisal Basri said as quoted by Kompas, the country's leading daily.

Faisal said that under the current situation, the public could only absorb a price increase of not more than 50 percent in average.

"It's like a lifter whose capacity can only lift a barbell of up to 50 kg. Even if he is given a dope, he will not be able to lift 100 kg because his capacity is only 50 kg. This (the fuel hike policy) is absurd, and this means that the government has opened its pandora box," he said.

Faisal said that he could not understand who was the architect of the fuel hike policy.

"I see them as heartless ... a group of people who don't care of the people's suffering. In fact, other people who previously supported a fuel price hike policy,now no longer has sympathy. I don't know what to say anymore, I was shaken by the announcement (of the fuel hike)," he said.

He explained that the sharp increase in the fuel prices was a dangerous move as it would create a series of negative impacts especially as the policy is taken near the Muslim Idul Fitr celebration.

Meanwhile, economist of securities firm PT MAndiri Sekuritas Kahlil Rowter supported the government's policy, sayind that the sharp one-time increase in fuel prices would pool the problems this year in the hope that the economy could recover quicker in 2006.

He expects to economy to grow this year at a slower rate of 5 percent, compared to the government's initial projection of 5.8 percent, while full-year inflation would jumpt to 12.5 percent, a condition to would push the central bank to jack up interest rate.(*)