Markus Junianto Sihaloho – The two parties that riled their ruling coalition partners last year to oppose an increase in the price of subsidized gasoline now say they are amenable to renewed plans by the government for a hike.

Mohammad Sohibul Iman, the deputy speaker of the House of Representatives from the Prosperous Justice Party (PKS), said on Wednesday that his party acknowledged the need to raise the price for private vehicle owners, but stressed that public transportation operators must be allowed to buy fuel at the current subsidized price.

"Considering the current state of macroeconomic stability and political developments, we believe the option of a dual pricing scheme for subsidized fuel is the best choice," he said.

"It will help ensure that the subsidy benefits those it is meant to, while also mitigating the financial risk posed by the size of the subsidy."

Under the government's dual pricing scheme, proposed on Tuesday, public transportation vehicles would be allowed to use subsidized fuel at the current price of Rp 4,500 (46 US cents) per liter. Owners of private vehicles, however, would have to pay a higher price of Rp 6,500 per liter.

Hatta Rajasa, the coordinating minister for the economy, said the ultimate aim was to ease the burden of the fuel subsidy on the state budget.

"We're [proposing] this with an eye on the public's purchasing power and inflation, and with the expectation that it will have a healthy impact on the economy," he said on Tuesday, following a meeting in Jakarta with senior ministers and all governors from across the country.

The Finance Ministry has calculated that the proposed hike will help the government save Rp 21 trillion a year from the fuel subsidy.

Sohibul called the proposal "easy and applicable," saying that with proper supervision of fuel sales, it had a good chance of proceeding smoothly.

He added the main advantage of the dual pricing policy was that the government would not have to give cash handouts to low-income families to help offset the fuel price hike, given that they were not expected to be impacted by the 44 percent increase at the pump.

"We won't need to give cash handouts anymore, which will make the government's job easier," Sohibul said. "That means the government can more efficiently allocate the budget and boost infrastructure spending."

Harry Azhar Aziz, a legislator from the Golkar Party, welcomed the proposed increase, but said the government must be prepared for the economic impact.

"We agree on the increase, but the president must order his minister in charge, including the trade minister, the agriculture minister and the industry minister, to institute policies that will minimize the impact from the resulting inflation," he said.

He also spoke out against giving cash handouts to the poor, saying it would defeat the purpose of trying to make savings in the state budget.

The PKS and Golkar were the main opponents of a similar government proposal to hike fuel prices in March last year, leading to condemnation and calls from the four other parties in the six-party ruling coalition for the PKS and Golkar to be kicked out of the bloc.

The Indonesian Democratic Party of Struggle (PDI-P), the main opposition party, was also against the proposed hike last year, but this time around has given mixed signals. Taufik Kiemas, a PDI-P stalwart and the speaker of the People's Consultative Assembly, said his party agreed with the notion that private vehicle owners should not be eligible for subsidized fuel.

"My party would approve it, and so would I. But the money saved from the fuel subsidy must be diverted to programs in the education, infrastructure and health-care sectors," he said on Tuesday.

However, Maruarar Sirait, a PDI-P legislator, said separately that the party would continue to oppose a price hike. He suggested the government could find other ways to offset the cost of the fuel subsidy, including by increasing taxes on coal exports.