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Power price hike unfair, say Japanese investors
Japanese investors have called on the Indonesian government to review its plan to increase electricity prices for large-scale electricity users by more than 60 percent this year, saying that the planned increase will seriously hurt their business
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apanese investors have called on the Indonesian government to review its plan to increase electricity prices for large-scale electricity users by more than 60 percent this year, saying that the planned increase will seriously hurt their business.
In an open letter addressed to Industry Minister MS Hidayat, Jakarta-Japan Club Foundation (JJC) chairman Takuji Motooka expressed the Japanese companies' concerns over the plan to increase electricity prices by 38.9 percent for industrial users in the so-called Group I-3 and by 64.7 percent for Group I-4.
Although the JJC stated it 'understood the price increase was aimed at reducing electricity subsidies in order to carry out reform in public finance', it felt the increase, if implemented, would be unfair, said Motooka, who is also the president director of Itochu Indonesia, in the letter.
Motooka said the sharp increase in electricity prices would be unfair. 'Burdening costs heavily on industrial users in groups I-3 and I-4 is apparently imbalanced from the aspect of fairness,' Motooka said.
Motooka asked the Indonesian government to reconsider the electricity tariff hike as it would bring a negative impact on investment plans and may also be an obstacle for the country in inviting foreign direct investment (FDI) because the hike was 'quite difficult to adapt to in a short span of time'.
Korean Chamber of Commerce in Indonesia (Kocham) president CK Song said as most South Korean companies in Indonesia were labor-intensive, their main concern was not electricity prices but the high minimum wage.
'Any increase is okay, but it should be a reasonable amount and should also be sustainable because it impacts on businesses and increases production costs,' CK Song told The Jakarta Post on Tuesday.
According to Industry Ministry secretary-general Ansari Bukhari, the ministry had not yet read the letter and declined to respond to the JCC's objection.
'The Industry Ministry's position on the electricity hike is clear. The price increase will be carried out gradually,' he said.
In January, House of Representatives Commission VII overseeing energy and natural mineral resources approved the Energy and Mineral Resources Ministry's proposal to increase electricity rates.
For industrial companies using more than 200 kilovolt amperes (kVa), known as Group I-3, the price will rise by a total of 38.9 percent.
Meanwhile, industries using above 30,000 kVa, known as Group I-4, will see a 64.7 percent increase.
Energy and Mineral Resources Minister Jero Wacik had said the increases would be made gradually every two months, starting from May until December.
'With the increase, [companies categorized as groups I-3 or I-4] will no longer enjoy subsidies by year-end,' said Jero earlier this year. According to the minister, May 1 was selected as the start of the electricity price hikes in an effort to maintain stability in the run-up to the general election held on April 9.
'If electricity prices are increased to 64 percent, we hope the adjustments can be implemented over two to three years instead of one year. If not, our domestic industry could collapse,' Indonesian Employers Association (Apindo) chairman Sofjan Wanandi has said. (dwa)
