House slammed for backing rate hike
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Local businesses strongly criticized the House of Representatives’ decision to approve a rise in electricity prices next year, stating that bureaucrats had decided “to murder local industry”.
Indonesian Employers Association (Apindo) chairman Sofjan Wanandi told The Jakarta Post that the 15 percent increase in power prices next year would have knock-on increases in operating costs for local industry.
“Aside from the electricity price hike, local industries have already been hampered by the government’s recent approval of a 50 percent boost the price of gas for industry and the planned rise in Jakarta’s provincial minimum wage [UMP] next year,” he said Tuesday.
The Apindo chairman was commenting on approval by House Commission VII overseeing energy affairs of the government’s proposal to increase electricity rates, which is expected to cut around Rp 12 trillion (US$1.2 billion) from government spending on subsidies. The government said that if there was no price increase, the electricity subsidy would increase to Rp 92.52 trillion from the Rp 80.93 trillion in the 2013 budget proposal.
The price rise, which excludes consumers from the small households and businesses using between 450 and 900 volt-amperes, would be implemented gradually, by between 3 to 4 percent a quarter from January, to lessen the impact on consumers, given traditionally intense public opposition to utility rate increases.
According to Sofjan, who claims the government and House had not discussed the decision with industry, local businesses already face declines in exports thanks to the global economic downturn.
The government, he added, must not blame businesses if they choose to import more materials next year to cut costs.
“It is the only thing businesses can do to cut costs other than cost efficiency, which of course, they will try to avoid,” he said,
adding that he had gathered businesses associations, including textile and glass industries to discuss the matter.
Sofjan said that the government and the House had decided to “murder” local industries by endorsing the power price hike, saying that if they wanted to increase government revenue, they should increase the subsidized fuel price instead.
“However, they aware that such decision will hurt their chances in the upcoming elections in 2014, so they chose this way. Alas, what can we say?”
Early this year, the government proposed the price of subsidized fuel rise to Rp 6,000 from Rp 4,500 per liter. The plan was rejected by the House after a series of protests in the capital. (asa)