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RI industries struggle with high energy, materials prices
Factories across the country are going through a tumultuous time as high energy costs force them to pass some of the pain through to their customers.
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Employees watch the production of the first hot rolled coil (HRC) steel at Krakatau Steel's second hot steel mill in Banten on May 17, 2021. (Courtesy of Krakatau Steel)
H
igh global energy prices are placing a burden on factories across Indonesia. Some are passing the higher input costs on to their customers, while others are resorting to coal as a cheaper alternative to oil.
Indonesian Chamber of Commerce and Industry (Kadin) deputy chair for industry Bobby Gafur Umar said the war in Ukraine had caused an “inevitable” increase in production costs, even if businesses implemented efficiency measures in their operations.
Inflation remained manageable in the past months, as many goods made in that time were produced with inputs brought into the country earlier, but Bobby warned that goods produced going forward would be more vulnerable to imported inflation as stocks of materials and semifinished goods needed to be replenished.
“The concern is that the government's projections for year-end economic growth will not come true. There are many reasons for this, one being that many expansion plans are currently on hold,” Bobby told The Jakarta Post on Wednesday.
To alleviate the significant strain that the higher-than-anticipated rise in oil prices is putting on the state budget, authorities hiked the prices of government-subsidized and some unsubsidized types of gasoline by about 30 percent earlier this month.
A decision by Group of Seven countries to limit imports and impose a price cap on Russian oil, and Russia’s subsequent suspension of gas deliveries through the Nord Stream 1 pipeline, have sent tremors across energy markets.
Read also: Pertamina in talks with Russia on oil imports
