The battle drum of the Indonesian people’s resistance to the planned fuel price increases has been sounded – students, the urban poor, workers, farmers and women in every corner of the country are daily holding actions that are growing and uniting day by day. This indicates that the people’s standard of living has declined to an intolerable level and that the Indonesian people are not prepared to accept the government’s plan to increase fuel prices by 30 percent.
The antiquated arguments being put forward by the government, the House of Representatives, the political elite and the hired intellectual pundits are all the same – the rise in world oil prices, which has reached US$120 per barrel or 1,116,000 rupiah per barrel or 7,018 rupiah per litre, has resulted in an increase in fuel subsides to as much as 21.4 trillion rupiah. The state meanwhile, does not have the budget to cover this, so like it or not, the cost of domestic fuel must be increased in line with the international prices.
What they never explain however is that why international fuel prices are tending to rise? And why must domestic fuel prices follow international fuel prices?
The reasons for the rise in world fuel prices:
1. The reason that is most often reported is the decline in supply from oil producing countries, either because of upheavals (such as Iraq or Nigeria), the decline in oil reserves (such as Indonesia) or because the governments and people in particular countries are in the process of nationalising international oil companies (as is occurring in Venezuela), while energy demand continues to increase, both in the imperialist countries (the US requires 20.59 million barrels per day, Japan 5.22 million barrel per day and Russia 3.10 million barrels per day) as well as in countries where there is rapid economic growth (such as India which requires 2.53 million barrels per day and China at 7.27 million barrels per day), even though there is no evidence to indicated that the world’s oil industries are unable to meet this demand.
2. The real reason – and this is rarely reported on – is oil speculation on international share markets. As is the case with other shares, oil share traders are extremely vulnerable to speculation, and it is this that is in fact triggering the increases in international fuel prices.
The real reasons for increasing Indonesian fuel prices:
1. The price of fuel in Indonesia always follows world prices because the majority of oil and gas companies in Indonesia are controlled by foreign capital (the owners of national oil industries) so that oil produced by Indonesia is prioritised for sale in international markets, and even if it has to be sold in Indonesia, then its price is the same as the international price of fuel (which they also determine).
2. What is sold domestically is limited to only 15 percent of total production, and this is also why the government has to buy fuel at international prices, when in fact these foreign companies should be obliged to supply this – and it should not just be 15 percent – but more. After all, this is oil taken from our own soil.
3. Indonesia does not have the industrial capacity to refine crude oil into fuel, so the fuel that we use on a daily basis must be purchased from other countries. Put simply, we have large reserves of crude oil (although it is controlled by foreigners, only a small percentage is controlled by the state-owned oil company Pertamina) that is taken overseas to be processed, they we buy it back at the international price. This is why the price of domestic fuel always follows international prices.
4. What adds further to these high prices is that the purchase and sale of this oil is done through brokers, so it is even more expensive again when it is sold back to the people. The profit on the importation of a barrel of oil is as much as 30 percent, so with our total imports reaching 113 million barrel per year, the brokers’ profit is US$170 million or 1.6 trillion rupiah. While for exported oil the brokers’ profit is US$2 per barrel. So with a daily export of 490,000 barrels, the money going into the brokers’ pockets is 9.3 billion rupiah per day or 3.3 trillion rupiah per year.
5. Worse still, all of the costs born by these foreign companies in drilling for crude oil (from the initial survey to production) are fully (100 percent, moreover it has now reached 120 percent because there is an additional 20 percent for companies that develop oil wells that have previously been processed) paid for by the government (with of course the people’s money, which comes from taxes and so forth), which is usually referred to as “cost recovery”.
1. So even though the Indonesian nation has at least 329 blocks or sources of oil and gas covering an area of 95 million hectares (half of Indonesia’s land area) with estimated oil reserves of as much as 250-300 billion barrels (equivalent to Saudi Arabia which is currently the largest oil producer in the world) with total daily crude oil production reaching 1 million barrel or 159 million litres per day, it does not benefit the people of Indonesia.
2. With the capacity to produce 1 million barrels of crude oil per day, at the current price of US$120 per barrel this translates into 1.104 trillion rupiah per day or 397.44 trillion per year. This does not yet include the value of gas sales, which are enormous, reaching 82.8 trillion rupiah per year. If all of the oil industries were controlled by a pro-people state, then there would be no state budget deficit as a result of the increase in world fuel prices (the budget deficit of 21.4 trillion rupiah is well below the profit of 397.44 trillion from oil and 82.8 trillion from gas).
3. Not to mention the fact that the state does not have to spend such excessive amounts on cost recovery. As of mid-2007 alone, the government spent 93.9 trillion rupiah on cost recovery.
4. The benefits for the people would increase if Indonesia could process its own crude oil, without having to send it overseas for processing, and then buy it back again. Just imagine, 4.9 trillion rupiah per year is wasted on brokers (export and import).
5. Now compare this with the direct cash assistance (BLT) for the poor which only amounts to 14 trillion over six months for millions of people, which in real terms translates into only 100,000 rupiah a month or 3,000 rupiah per day for each of these millions of people. If domestic fuel prices are increased, this will not even be enough to compensate for increases to public transport costs.
Why is the Indonesian nation, which is rich and large, colonised by foreign capital?
1. Because all of the political forces in Indonesia (the parties of Suharto’s New Order regime, the military, the fake reform parties, the fake nationalist parties and the parties that act in the name of religion but leave their religious communities to be colonised) are cowards in the face of international capital, who have moreover by acclamation supported the enactment of laws and regulations that allow international capital to plunder Indonesia’s natural wealth including our oil (the latest being the law on capital investment and its derivatives) and to exploit our labour. Although the Indonesian Democratic Party of Struggle (PDI-P), the National Awakening Party (PKB), the Justice and Prosperity Party (PKS) or the speaker of the House of Representatives who is from the Golkar Party are currently opposing the fuel price increases, this is only as a means to boost their popularity in the upcoming 2009 general elections. This is also the case with the old political elite figures that are now on the political margins, which are busy proclaiming their opposition. There are none who are actually prepared to oppose the colonisation by foreign capital like Fidel Castro in Cuba, Hugo Chavez in Venezuela, Evo Maorales in Bolivia or Indonesia’s founding President Sukarno in Indonesia.
2. Because the intellectuals (economic and political observers, university rectors and lecturers) are also cowards. Moreover there are many who are even prepared to be paid by international capital, the government or by other means to support these colonialist programs (by providing research funds, scholarships, facilities and the like).
3. Domestic companies also have the same mentality as the political elite, not resisting the domination of international capital, but instead becoming the agents of international capital. Even now organisations such as the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers Association (Apindo) are vehemently supporting the fuel price increases.
4. The principle force that is capable of confronting international capital – the working class and the poor – have yet to demonstrate their real strength in the form of nationwide mobilisations and by uniting the movement organisations.
The solution for the Indonesian people:
1. Take over all oil and gas and other vital industries in Indonesia under the control of the people;
2. Repudiate the foreign debt;
3. Cooperate with the governments and people of Venezuela and Bolivia to develop refineries and the oil industry;
4. Diversify energy sources in order to guarantee environmental sustainability;
5. Push aside the capitalist class, the elite and the political parties that deceive the people, build the people’s own power.
1. Cancel the planned fuel price hikes and bring down prices;
2. Seize the assets of former President Suharto and his cronies and monies embezzled through the Indonesian Bank Liquidity Support scheme;
3. Cut the wages of government officials at the national to the sub-district level by 30 percent;
4. Cut the wages of executives at private companies by 50 percent;
5. Place limits on private capital by means of restricting the capital ownership, increasing tax on private cars, increasing parking fees and so forth;
6. Apply a 35 percent tax on the profits from export and import of oil.
A call to unite in opposition:
1. Hold daily mass actions, everywhere, by means of factory strikes, road blocks, occupying government offices and mass actions in the streets to thwart the fuel price hikes;
2. Unite the student’s actions with the people’s actions, make the campuses a place to consolidate the people’s mass struggle;
3. Hold a nation wide action simultaneously on May 21 and June 1, besiege and occupy the centres of power. In Jakarta, let’s besiege and occupy the State Place;
4. Unite and build the people’s movement resisting colonialism nationally as an embryo of a new people’s government.
- Besiege and occupy the State Palace on May 21 and June 1
- Thwart the planned fuel price hikes by uniting the people’s mobilisations
- Take over the oil and gas industries by people’s mobilisations under the control of the people
- Push aside the capitalist class, the political elite and the political parties that deceive the people. It is time for the people to take power
National Liberation Front (PPR)
Jakarta – May 13, 2008
General Secretariat: Jl. Pori Raya No 06 RT009/RW 010
Pisangan Timur, Jakarta Timur
Phone/Fax: 021 4757881
The National Liberation Front (Front Pembebasan Nasional, FPN):
BPI, the Coalition of People Against Eviction (PAWANG), the Coalition of the People Arising to Resist (Korban), the Commission for Missing Persons and Victims of Violence (Kontras), the Indonesia Legal Aid and Human Rights Association (PBHI), the Indonesian Association of the Families of Missing Persons (Ikohi), the Indonesian Buskers Union (SPI), the Indonesian Forum for the Environment (Walhi), the Indonesian Student Secretariat (SMI), the Institute for Public Research and Advocacy (Elsam), the Institute of Global Justice (IGJ), the Jakarta Legal Aid Foundation (LBH), JGM, JKB, the Agrarian Reform Consortium (KPA), LPBH FAS, Movement (Pergerakan), the National Transport Workers Federation (FBTN), Free Women (Perempuan Mahardika), the Politics for the Poor-Indonesian Student League for Democracy (LMND-PRM), the Poor People’s Alliance (ARM), the Poor Peoples Political Union (PPRM), Praxis, SIEKAP, SPEED, SPP, VHR, the Workers Challenge Alliance (ABM), the Working People’s Association (PRP).
[Translated by James Balowski.]