Indonesian government seen as incapable of making tough decisions

It is still two long years before the 2014 Indonesian elections, but President Susilo Bambang Yudhoyono's ruling coalition can no longer be deemed an effective government government capable of taking hard decisions. The refusal of coalition partners Golkar and the Justice and Prosperity Party (PKS) to support a 33 per cent increase in the prices of subsidized petrol and diesel has dealt a mortal blow to Dr Yudhoyono's hopes of ending his final term on a high note.

Granted, there is an optional measure authorising an adjustment at the end of six months if the Indonesian crude price (ICP) averages 15 per cent above the US$105-a-barrel assumption in the revised 2012 budget. But this cannot mask the worst defeat of Dr Yudhoyono's eight-year presidency. Government planners can also take little comfort from the fact that the ICP averaged US$119 for the first two months of this year, just below the trigger point.

Credits: The Straits Times