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JAKARTA. At the beginning of 2017, the entrepreneurs have been hit by the two punches at a time, namely the increase in production costs, as well as the threat of declining purchasing power.
The first sledgehammer blow to the entrepreneurs was the increase in non-subsidized fuel price by Rp 300 per liter, as well as the increase in the price of fuel for industry. The second blow was the removal of subsidized electricity for the segment of 900 VA.
The increase in the price of non-subsidized fuel will definitely increase the price of fuel for industry. Because, “The price’s benchmark is market index,” said Vice President Marketing of PT Pertamina Afandi, Thursday (5/1). The price of fuel for industry is determined by the negotiations between Pertamina (State Owned Oil and Gas Company) with buyers, or business to business.
Corporate Secretary of PT Darman Henwa Mukson Rosyidi projects that the price of fuel for industry will remain moving around Rp 7,000 per liter.
According to some data obtained by KONTAN, Pertamina sets the price of fuel for industry at the range of Rp 6,000-Rp 12,700 per liter during the period of 1-14 January 2017. Meanwhile, Shell sets the price at the range of Rp 7,200-Rp 12,600 during the same period.
Vice General Chairman of Chamber of Commerce and Industry for Industrial Affairs Johnny Darmawan deplored the government policy, which increases the tariffs concurrently in the early of this year. “This will be burdening the entrepreneurs,” he said.
Meanwhile, Care Taker of Secretary General of Ministry of Industry Harris Munandar said, the policy will affect the most to food and beverages industries.
According to General Chairman of All Indonesian Food and Beverage Business Association (GAPPMI) Adhi S Lukman, the costs of fuel for industry contribute to 5%-10% of companies’ costs structure. Therefore, the increase in the price of fuel for industry can lead to 5% increase in food products within one month ahead. “We confirm that the increase will not exceed that number,” he stressed.
However, he expects that the increase in provincial minimum wages in this year, which will be ranging at 8%, can boost public’s purchasing power, despite of increases in fuel price and electricity basic tariffs. He is optimistic that as of the end of 2017, the food industry can have better growth than in 2016. Last year, the food industry grew by 8%-8.2%.
The increases in food products can encourage retailers to raise the prices. Vice General Chairman of the Association of Indonesian Retail Merchants (Aprindo) Tutum Rahanta said, the price rise in upstream side will be followed with the price rise in downstream side. “If they increase the prices, we will do so,” Tutum said. (Muhammad Farid/Translator)
