Electricity Rates Up, Industry Gears Up to Bump Prices
17 April 2014 14:00 WIB
TEMPO.CO, Jakarta - Industry players have grown restless of the government's decision to raise electricity tariffs by industry May 1, 2014. Businesses respond by preparing to raise their product prices to offset the soaring cost of production.
Chairman of the Indonesian Textile Association, Ade Sudrajat, expected textile product prices to jump by about 15 percent. But, the increase, he said, will actually benefit importers as they are not experiencing expenses increase in their homelands. "Imported textile products will flood the domestic market," he said yesterday.
The decision to raise industrial electricity rates, Ade said, is counterproductive to the government's desire to boost investment in Indonesia. Ade mentioned South Korea's, who provides cheaper rates for the industry rather than domestic customers.
"Electricity for the industry is cheaper because it is considered to have a multiplier effect. Why is it the opposite in Indonesia?" he said.
Budi Susanto Sadiman, deputy chairman of the Aromatic Olefin and Plastic Industry Business Development Association (Inaplas), said the tariff hike will affect the plastic industry, where electricity expense is the second largest cost after raw materials.
"This hike will increase costs, whereas we are expecting intense competition next year with the ASEAN Economic Community," Budi said in Jakarta yesterday.
The Ministry of Energy and Mineral Resources recently issued Decree No.9/2014 on electricity rates hike. The increase will take place every two months, starting May 1, 2014 until April 1, 2015.
The increase electricity tariff is applicable to two classes of customers: companies listed on the Indonesia Stock Exchange with power over 200,000 watts (I-3), and industrial customers using a minimum of 30,000 watts (I-4).
"For listed companies, the rate is increased 8.6 percent per every two months, for the I-4 class the increase is 13.3 percent per two months," said Jarman, director general of electricity at the Ministry of Energy, yesterday.
BERNADETTE CHRISTINA MUNTHE | AMIR TEJO
