GOVT ADVISED TO CUT FUEL OIL PRICES OVER GLOBAL FINANCIAL CRISIS

Jakarta, Oct 22 (ANTARA) - The government should cut fuel oil prices to curb the impact of the US financial crisis on the real sector, small and medium businesses in particular, an economist said.
"Lowering fuel oil prices is one of the steps the government must take now," Prof. Mudrajad Kuncoro, Ph.D, said on Wednesday.
The professor of the Yogyakarta-based Gadjah Mada University (UGM) said lowering fuel oil prices was a concrete step that would have a positive impact on the real sector to weather the global financial crisis.
In addition, the government should also tighten the import of finished goods and prevent the import of illegal goods, he said.
"We suggest that the government boost the development of infrastructure facilities in Indonesia," he said.
The other step the government needed to take was providing tax incentives to export-oriented industries such as textile, downstream and labour-intensive industries, he said.
He said the impact of the US financial crisis had been felt since September 2008.
"This can be seen from the rupiah's exchange rate against the dollar which has shown a downward trend and the share composite index which has sharply depreciated since September 2008," he said.
In October 2008, the rupiah's exchange rate against the dollar once hit a record low of Rp9,870 and the composite share price index closed lower at 1,451, he said.
Oil prices fell toward US$70 Tuesday, pressured by expectations that a global recession will crush oil demand, which could in turn limit the impact of any supply cuts by OPEC.
The market recorded an oil-price high above $147 in mid-July.