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ocal business groups have strongly opposed the government'€™s plan to significantly raise basic electricity prices for the industry next year, saying that the hike should be canceled given the current unfavorable conditions in the country'€™s economy.

Under the plan, electricity prices will be increased by 38.9 percent for industrial firms using medium-voltage power, such as textile and footwear manufacturers, and by 64.7 percent for those utilizing high-voltage power, including cement, steel and glass producers.

The sharp electricity-price increase was caused by the hike in the average price of Indonesian crude and the sharp depreciation of the local currency against the US dollar, which placed an additional burden on state-owned utility firm PT PLN.

Industrial customers had to cope with electricity-price increases four times this year.

Franky Sibarani, coordinator of the country'€™s various business associations (FORKAN) communication forum, said on Wednesday that local firms would not be able to bear another electricity-price increase because this year'€™s increases, which reached between 40 and 45 percent, had already severely hurt business.

In addition to higher electricity prices, increases in minimum wages, fuel prices and interest rates also affected business.

'€œThe power-price increase will create a domino effect because the rise in operating costs will be passed to consumers,'€ he said.

Forkan groups 28 business associations involved in a wide array of industrial sectors, such as automotive, textile, footwear, food and beverage, steel and electronics, and includes the Association of Indonesian Automotive Manufacturers (Gaikindo), the Indonesian Motorcycle Industry Association (AISI), Indonesian Textile Association (API) as well as the Indonesian Food and Beverages Association (Gapmmi).

Higher electricity costs will cause a notable jump in business costs from the upstream to downstream sides as they represent 20 percent of overall production costs. For food and beverage manufacturers, that will translate into an increase of selling price between 10 percent and 15 percent as the electricity cost accounts for 5 percent to 10 percent of total costs.

Franky further said that bigger risks loomed for firms in labor-intensive industries, such as food and beverage, textile, electronics and cosmetics, as electricity costs contributed much bigger to total production costs, adding to their vulnerability.

'€œThe condition could result in firms reducing operating hours, which can in turn influence them to cut jobs and even halt production,'€ he said.

In response to the plan, Industry Minister MS Hidayat said that raising electricity prices next year would be inevitable, but acknowledged that it would be hard for local industry to face such sudden and high jumps in electricity prices.

To ease its impact, Hidayat called on PLN to increase prices in stages like this year, when they were raised gradually every three months.

Earlier, the Indonesian Chamber of Commerce and Industry (Kadin) said that it would be unfair if only industrial firms were hit with the electricity-price increases while household customers did not receive similar treatment despite their stronger purchasing power. Hidayat said that he would discuss the issue with the Energy and Mineral Resources Ministry soon.