Indonesia vows to protect poor from fuel price hike

JAKARTA (Reuters) - Indonesia's government will protect the poor from the impact of any fuel price hike aimed at cutting hefty subsidies, Vice President Jusuf Kalla said on Wednesday.

Indonesia, which has some of the lowest fuel prices in Asia, has said it plans to increase fuel prices, a move that could spark anti-government protests ahead of next year's parliamentary and presidential elections.

Price hikes are a sensitive subject in Indonesia. Apart from an inflation shock in 2005 -- the last time the government raised fuel prices -- a big increase triggered rioting that helped topple former president Suharto in 1998.

Many in Indonesia live on less than two dollars a day and are already grappling from the impact of high food prices.

The government has not specified the size of the price hike this time, but President Susilo Bambang Yudhoyono has said that it will be around 20-30 percent.

Kalla said the hike would not be higher than 30 percent.

"Let say if it (the fuel price) is increased by 30 percent, around 50 percent of the revenue from that hike would be given to those less fortunate. They will directly be given cash," Kalla told reporters.

Om Tuesday, students and police clashed in eastern Indonesia during a protest against the government's plan to raise fuel prices.

Indonesia, Asia's top diesel and gasoline importer, provides heavy subsidies for fuel that help shield consumers from the market price of crude.