GASOLINE PRICE CUT PROVES GOVERNMENT`S SINCERITY : OBSERVER

Medan, Indonesia, Nov 7 (ANTARA) - Although the government's decision to lower the premium gasoline price by Rp500 per liter will not have a significant effect on the national economy, it is proof of the administration's sincerity and transparency, an economic observer said.
With the adjustment of the fuel oil price in the wake of the decline in the world crude price, the government had actually adopted a fair policy, Jhon Tafbu Ritonga, dean of the economic faculty of North Sumatra University (USU), said here on Friday.
Earlier, the government had announced it would cut the price of premium gasoline by Rp500 from Rp6000 to Rp5,500 per liter as of December 1, 2008.
The policy to lower the price of fuel oil will bring about a psychological effect among the people in the sense that the government would be considered sincere, Ritonga said.
The government would also be seen as being transparent in managing the global oil price-affected economy.
The government increased the price of domestic fuel oil on the basis of a rise in the price of world crude oil on international market and would also cut the price because of a slump in the price of international crude oil.
However, Ritonga added, the cut in subsidized fuel oil would have no significant effect on the national economy as the prices of basic commodities would relatively remain unchanged.
The policy was likely to have a positive effect only in psychological terms, he said