The Indonesian government has dropped a plan to limit sales of subsidised fuel to private car owners next year out of concern the initiative would boost inflation, Vice President Jusuf Kalla said on Friday.
The government was considering limiting access to subsidised fuel, worried that if global oil prices would stay near record highs of around $100 a barrel next year the subsidies would pose too much of a burden for the state budget.
But the plan drew criticism from the public and economists who said it would raise transportation costs and add to inflation, which at an annual rate of 6.7 percent recorded in November was already among the highest in Southeast Asia.
"We must maintain inflation at manageable levels. As we know, we are now also facing many problems such as (natural) disasters, floods, which could have an impact on food stocks," Kalla said.
Indonesia is Asia-Pacific's only member of the Opec oil exporters' cartel, but because of its flagging output about 30 percent of its domestic fuels consumption must be covered by imports.
The government had planned to limit sales of subsidised low-octane gasoline to public transportation vehicles and motorcycles, forcing private motorists to use new, more expensive high-octane gasoline.