Chairman of the advisory council of the Indonesian Textile Association (API) Benny Sutrisno has said that electricity tariff cuts and discounts for industries only contribute 0.2 percent to textile industry production costs.

"It is because the textile industry operates 24 hours a day," said Benny in Jakarta on Friday.

He further explained, when operating between 5 a.m. and 10 a.m., textile businesses are required to pay a penalty 50 percent of total power consumption. Meanwhile, in the third economic policy package, the government offered a 30 percent discount to industries for electricity usage between 11 p.m. and 8 a.m.

"The portion of electricity costs is about 10 percent of total production costs, meaning that it only affects 0.2 percent of production cost savings," he added.

In the third economic policy package unveiled on Wednesday, state-owned electricity company PLN offered companies engaged in labor-intensive sectors that are plagued by financial turmoil the option to delay paying their electricity bills (up to 60 percent of the bill) until next year. This will reduce the risk of bankruptcy as well as layoffs.

Meanwhile, PLN head of marketing division Benny Marbun said 12,333 medium and large industry players would get the benefits of such incentives.

"That includes the customer group of the textile industry, manufacturing, metal, iron and steel, which employs a workforce in large numbers," said Marbun.

PLN'€™s customer I-3 is a medium-sized business with power capacity above 200 kVA. While customer I-4 is a large business with a power capacity of 30,000 kVA and above.

Marbun further said the electricity tariff for medium-sized businesses has gradually decreased to Rp 1,187 per kWh in October 2015. While the price of electricity for large-scale businesses has gradually decreased to Rp 1,058 per kWh on October 2015.

"Electricity tariff cuts, however small, are very meaningful for the industry," he said.

The last installment of the economic stimulus package is more focused on cutting domestic operational costs in order to support local industries. This will not only help local businesses survive the current economic slowdown, but will also avert the emergence of more layoffs. (bbn)

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