FOOD AND BEVERAGE ENTREPRENEURS RECALCULATE ITS INDUSTRY GROWTH

Food and beverage industries began to make calculations, wether overall of the end of this year and predictions for early next year. Based on the conditions of the adjustment of several industrial raw materials, provincial minimum wage (UMP), electricity tariff, and removal of fuel subsidies around IDR 2 thousand/liter, coupled with the increase in BI rate, this industry finally set a maximum growth of 6 percent, or possibly only around 5 percent.

Meanwhile, next year, as stated by Secretary General of the Indonesian Food and Beverage Association (GAPMMI), Franky Sibarani, on Thursday (November 20), this industry only grows around 6 to 7 growth of this industry in the previous years which reached two digits is partly due to high imports of raw materials that range between 60 to 80 percent, so that high rupiah exchange rate which is currently stood at IDR 12 thousand/1 USD greatly affects the price of raw materials.

Additionally, distribution cost also affects slower growth of this industry, because even though it is only 2 percent, it contributes to the calculation of production costs. Reportedly, there will be no increase in electricity tariff the next year, only adjustment based on world crude oil price which is currently in the range of USD 70 – USD 80/barrel. Related to the stipulation of provincial minimum wage (UMP) that has been stipulated.

Deputy Secretary General of the Indonesian Employers Association (APINDO) emphasized the transfer of allocation of fuel subsidy by the central government this week will affect the cost of transportation, because it is one of the components in the calculation of UMP. He believes that it is better for the local government to re-evaluate UMP after it is set, there are companies that suspend payment of UMP, he said.

Likewise, the increase in the coast of public transportation that has been agreed at 10 percent, but in fact it shows a different situation. That is why the business community wants to make adjustments to the calculation of employee transportation costs, because it will indirectly justify the calculation of UMP in each region, which will take effect in 2015.

When asked about the percentage of the increase in price of food and beverage products, Franky said, that the price increase will be done in January next year, assuming that price increase is about 5 that have to increase up to 10 percent, as a result of adjustments to production cost components. However, although it will raise the price of their products, GAPMMI still take into account a number of factors, such as low purchasing power and the condition of the world economic which is unstable or decelerating.

Based on data from the Ministry of Industry, the food, beverage and tobacco sector plays a major role in Indonesian economic growth. The role can be seen from the contribution of export value of food and beverage products in the first half of 2014 that reached USD 2.6 billion, or increase compared to the export value in the first half 2013 amounting to USD 2.4 billion. In addition, its contribution can also be seen from the development of investment (PMA) at USD 2,065 million and domestic investment (PMDN) at IDR 9.7 trillion. (E)

Business News - November 26, 2014