Page last updated at 11:20 GMT, Saturday, 24 May 2008 12:20 UK

Indonesia pushes up fuel prices

Petrol queue in Yogyakarta - photo 23 May
Queues formed at petrol stations ahead of the midnight price rise

The Indonesian government has raised fuel prices by nearly 30%, prompting fears of widespread unrest.

Several hundred students protested against the move, clashing with police at Jakarta's national university. More than 100 people were arrested.

The government is struggling to meet the cost of fuel subsidies as global oil prices escalate.

But it has put into effect a cash handout scheme worth $1.5bn to try to cushion the effect for the most needy.

Malaysia is also considering overhauling its subsidy system, and Taiwan has decided to end a freeze on petrol prices in June.

Unpopular measure

Police say the students were arrested after throwing rocks and firebombs at officers and burning tyres during protests at the university campus.

Women cash in fuel compensation coupons in Jakarta
Indonesia is trying to soften the blow for the poorest people

Dozens more arrests were reported at a separate demonstration outside the presidential palace.

There were also reports of rallies in the second city Surabaya.

The BBC's Lucy Williamson in Jakarta says the rise in fuel prices - though expected - has not been popular, especially with poorer Indonesians.

The government says it is these people it is trying to help, by cutting subsidies which go into the pockets of the country's rich, who are more likely to own cars.

In several cities it is beginning cash handouts, intended to shield around 19 million poor families from the price rises.

But our correspondent says many Indonesians are worried the price hikes will mean that basic goods and public transport will also become more expensive.

After sharp rises in the price of rice, it could push many more families towards poverty, she adds.

Millions of Indonesians currently live on less than $2 a day.


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