T

he blackouts conducted by the state power company PT PLN are likely to slow economic growth in the fourth quarter of this year, said an official at the Jakarta chapter of the Central Statistic Agency (BPS).

"If the blackouts go on until December, it will tend to slow economic growth in the fourth quarter, which will affect economic growth for this whole year," BPS head Agus Suherman told reporters Friday.

He said electricity was the energy source for all industrial businesses, regardless of their size. "Large enterprises may have generators, which will help, but small enterprises like restaurants will suffer," he said.

Arianto A. Patunru, the director of the Institute for Economic and Social Research (LPEM) at the University of Indonesia, voiced a similar view on a possible slowdown in economic growth during the fourth quarter.

"*Slow growth* is very possible if the blackouts continue," he told The Jakarta Post over the phone.

He agreed small enterprises would suffer the most, but he emphasized that big business players would also feel the pinch because fuel costs for generators would increase their total production costs.

Arianto said it was time for the central government to review PLN's monopoly on providing electricity as currently, PLN was pushed beyond its capacity, providing electricity with minimum resources.

"PLN is often criticized because of its monopoly on electricity. At the same time, the company is forced to sell electricity below its real cost, which makes it suffer financial losses," he said.

Agus said the city's economy grew at 5.11 percent in the third quarter this year compared to the same period last year. Economic growth in the third quarter showed an increase of 2.98 percent compared to the second quarter this year.

"But remember, this figure is based on the calculation as of September, before the blackouts started," he said.

Despite the electricity setback, the city administration will likely reach its 2009 economic growth target of between 3.25 percent to 4.25 percent, which he considered a moderate target.

"The fact is, the economic situation is improving. So, if the target is low, it will be achievable," Agus said.

The economic growth target of 3.25 percent to 4.25 percent was set when the city was proposing a 2009 revised budget in July. However, Governor Fauzi Bowo increased the target a few months later, despite the recurring blackouts.

During a proposal of the 2010 budget in October, Fauzi said in his speech he was optimistic the city would achieve its economic growth target of 5.5 percent this year, considering that in September this year's growth had reached 5.11 percent. Fauzi added economic growth for 2010 was set at between 4.25 percent to 5.25 percent, lower than the national economic growth target of 5 percent.

Agus said the transportation and telecommunications achieved the biggest growth with 5.74 percent, tailed by the trade and hotel and restaurant sectors with 3.72 percent and construction with 3.39 percent.