Sharply higher fuel prices took effect in Indonesia on Saturday, sparking some protests as President Susilo Bambang Yudhoyono bet his popularity would blunt social unrest in the world's fourth-most populous country.
There were scattered demonstrations against the price hikes and some bus drivers went on strike in more than half-a-dozen Indonesian cities, including the capital Jakarta, but it was still early to gauge the level of opposition.
Speaking before the hikes were unveiled on Friday, Yudhoyono urged Indonesians to accept a "bitter" policy he said was vital to rescue Southeast Asia's largest economy.
Analysts say continuing subsidies giving Indonesians fuel at prices far below global levels risked ballooning budget deficits and a meltdown of the country's rupiah currency.
"It's a very positive and bold step forward," International Monetary Fund Jakarta representative Stephen Schwartz said of the move to bring prices closer to market levels.
The programme "would certainly help to address the budgetary and balance of payments pressures that we've seen in recent months from high oil prices," he told Reuters.
Though few took to the streets to protest the price hikes on Saturday, many were surprised by their scale as gasoline nearly doubled to 4,500 rupiah (44 US cents) a litre; diesel was up 105 percent to 4,300 a litre, and household kerosene, used for cooking, almost trebled to 2,000 rupiah a litre.
"In the circumstances the government is trying to kill its citizens slowly because of the increases ... Better if the government collects the people in a field and then shoots us, so we can die faster," said Erlina, a housewife in Padang on the west coast of Sumatra.
Tifatul Sembiring, chief of the Prosperous Justice Party (PKS), which has been a key parliamentary ally of Yudhoyono, or SBY as he is popularly known, said in a telephone text message the influential party opposed the price move.
"PKS will launch a harsh protest to SBY after he ignored our call to postpone the hikes ... The decision is very outrageous and shows there is no empathy to the condition of the public."
CONCERNS STILL REMAIN Standard Chartered Indonesia economist Fauzi Ichsan said: "the concern is that if that decision triggers social unrest and the rupiah tanks further then we go back to square one."
"I would say this is SBY's biggest political gamble," he said, though like some other analysts he thought the fact the increases come just ahead of the Islamic Ramadan fasting weeks could minimise protests in the world biggest Muslim country.
Dewi Fortuna Anwar, a political analyst who advised one of Yudhoyono's predecessors, said the government was taking a chance but it had little choice.
High world oil prices have ratcheted up Indonesia's fuel subsidies, which will eat up nearly a fifth of this year's budget. While Indonesia produces oil, falling output has forced it to import, hitting the currency and hurting the economy.
"It's never going to be easy for the government but I don't think the government really has much room to manoeuvre in this respect," Anwar told Reuters.
Moves to boost fuel prices by autocratic president Suharto sparked bloody riots in 1998 and helped bring his downfall after decades in power. Other presidents dropped or muted similar plans in the face of popular unrest.
On Friday, riot police fired tear gas and warning shots into the air as they clashed with students in Jakarta, and earlier that day and on Thursday thousands of demonstrators had turned out at various demonstrations across the vast archipelago.
Still, by the standards of Indonesia which has 220 million people, the demonstrations have been limited, though that could change as the full impact of the hikes sinks in.
"...Given the magnitude of the fuel price hike it can be very emotional," said economist Fauzi.
Many expect the high fuel prices to have a ripple effect across the economy, boosting costs of other goods and services.
The government had already said rice prices would go up to help farmers compensate for higher costs from the hike, and on Saturday Transportation Minister Hatta Radjasa said public bus fares should go higher as well.
"I have called the (provincial) governors and asked them to give initial price hikes immediately" in a range of 20 to 25 percent, he told Metro television.
To help the poor cope, the government has prepared a cash compensation package to help 15.5 million families, or 62 million people, representing nearly a quarter of the population.
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