Electricity Rates Up, Industrial Growth Target will be Cut
22 April 2014 13:46 WIB
TEMPO.CO, Jakarta - Minister of Industry Mohammad Suleman Hidayat said the increased electricity tariff for industry groups I3 and I4 will greatly affect the performance of the industry. He ensured that the hike will cut Indonesia's industrial growth target.
"The growth target will surely be revised. But we are still calculating just how much," he told reporters at his office yesterday.
The Industry Ministry previously targeted this year's industrial growth at 6.4 percent. Last year, industrial growth reached 6.1 percent.
Hidayat is worried that the tariff hike would cause financial disruptions that will ultimately lead to downsizing and layoffs. Industries that will be affected the most are sectors that mainly contribute to Indonesia's non-oil exports such as steel, petrochemicals, cement, and textiles.
According to Hidayat, employers actually understand the reasons for tariff hike, gut they feel that a 64-percent in six months is too burdensome. "The industry expects a gradual rise over three years. But I was too late to negotiate; the rule was already issued," he said. Hidayat made sure he will still attempt to negotiate the electricity tariff increase.
Coordinating Minister for Economic Affairs Hatta Rajasa said that employers' objection over the hike is too late. "If you want to talk about it before, please do—go ahead. You can debate until [you find an agreement]. But it is now already a law product, so they have to comply," he said at his office yesterday.
Hatta said there is no chance for the hike to be canceled because the State Budget already included the increase as a state budget post.
Enny Sri Hartati, executive director of the Institute for Development of Economics and Finance (Indef), said that in the manufacturing industry cost structure, electricity cost component accounts for about 10 percent, depending on the type of industry. "Industries don't actually mind as long as there is a clear trade-off, such as a guarantee that electricity supply will be enough and there will not be outages," she said yesterday.
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