Indonesia eyes fuel price cuts; China, India next

By Clarence Fernandez

SINGAPORE (Reuters) - Indonesia moved towards cutting subsidised fuel prices by up to 15 percent on Tuesday.

The move would ease the subsidy burden on the government and could also help dampen inflation running near a two-year high that has forced the central bank to keep raising rates.

China and India showed signs of eventually following suit, analysts said. Malaysia and Vietnam have already made similar cuts.

Crude prices have fallen to $64 a barrel from their peak of more than $147 in July.

Indonesia's energy ministry said on Tuesday it would recommend that the government cut fuel prices, rolling back as much as half of an unpopular increase in May to ease stubbornly high inflation and stoke support ahead of elections next year.

Chinese policymakers have been considering cuts for at least a week, and an Indian government official said a week ago that New Delhi would cut prices if crude import prices held below $60 for a few weeks, which now seems a possibility.

Indonesia's cut in heavily subsidised motor fuel prices would need cabinet approval, the timing of which was not disclosed.

Evita Legowo, the oil and gas director general at the energy ministry, told reporters that she was proposing a temporary cut of between 500 and 800 rupiah per litre for gasoline and diesel, but did not say when the proposal would go to the cabinet.