Devi Asmarani, Jakarta – President Megawati Sukarnoputi faces one of her toughest challenges today as Indonesia's businessmen join thousands of their employees here in a rare alliance to protest against the recent price hikes.

"This is the first time the private sector – which is normally the most apolitical and pragmatic segment of society – is openly demonstrating against the government," said MP Ferry Mursidan Baldan.

"Such a show of solidarity with labour shows that the business sector's much-needed support for the government is slipping, unless the government reverses its decision on price hikes."

Supporters of Mrs Megawati fear that if the strikes continue, it would provide further ammunition to her critics to rally against her economic policies, more so at a time when she needs to restore investor confidence.

The businessmen, who were normally at odds with labour unions, yesterday encouraged their employees to take a day off to protest against the government.

Mr Djimanto, deputy chairman of the Indonesian Employers Association, told The Straits Times: "We will give permission to those who want to join the rally."

For now, though, the businessmen seem to be treading carefully – not wanting to jeopardise their already-affected businesses. But the tide could turn depending on the measures taken by the government in the next few days.

Said Mr Djimanto: "We will make sure that our companies and our factories will operate as normal – because we will try to limit the number of those joining the rallies to 10 per cent of our employees."

This, he said, would also ensure that the rally does not create a massive traffic jam in the capital as about 10,000 protesters are expected to take part. Protests erupted earlier this week after a series of price hikes. The government raised fuel prices by up to 22 per cent on January 2 to reduce subsidies and contain budget deficit.

Electricity charges were raised by 6 per cent on January 1 and three further quarterly increases of 6 per cent are to follow later this year. Telephone charges have been increased by an average of 15 per cent.

Said chairman of the Indonesian Chamber of Trade and Commerce Aburizal Bakrie: "Principally, we want the government to address the problems that are causing a high-cost economy ... before it implements the price hikes." Mr Aburizal and other businessmen yesterday met Vice-President Hamzah Haz and economic ministers to propose a delay in the hikes.

Meanwhile, student protests continued for the third day yesterday in Jakarta and in several other Indonesian cities. They burnt tyres on the streets. In Jakarta, a fuel tanker was hijacked. In Palu, Central Sulawesi, students burnt the portraits of Mrs Megawati and Mr Hamzah.

But the President was annoyed with the developments. She complained to a group of high-ranking officials that the protesters had no respect for state leaders. "I cannot accept it if they are stepping on and burning the flag and effigies of the leaders," she said.