Plan to increase prices of subsidized oil fuel (BBM) in the near future will not have major impact on the industry. Although there is effect on the increase in logistic prices, entrepreneurs believed that the impact of the increase is very minimal. Subsidized fuel price hike also did not interfere with the production cost structure of the industry. Because, since 2005, the industry has been using non-subsidized BBM for production purposes.
Panggah Susanto, Director General of Manufacturing Industry Basis at the Ministry of Industry, in Jakarta on Friday (June 7, 2013) said that the subsidized fuel prices increase has very little effect on the manufacturing industry. He cited the cement and steel industry steel industry who has made adjustment previously. So is the metal industry. Industrial sector which is slightly affected by rising fuel prices are labor-intensive industries such as textiles, children toys, foot wear, furniture and food industries. “But, in general, the increase in fuel prices did not have much impact on the performance of the national manufacturing industry”, said Panggah.
Panggah explained that the plan to increase prices of subsidized fuel of premium gasoline type is from Rp4,500 to Rp6,500 per liter, and diesel fuel from Rp4,500 per liter to Rp5,500 per liter is estimated the only increase transportation cost. According to him, with the increase in transportation cost, in general, increase in the load of the industry players is only 1.2%. The largest increase will be experienced by textile and footwear industry at 1.54%. Meanwhile, the cement industry production cost will increase 0.66%. While, production cost of the food & beverage industry is estimated to rise about 0.63%.
He said that the performance of non oil & gas manufacturing industry in the third quarter of 2013 reached 6.69%. This growth in the same period which is 6.02%. Industry branches which experienced the highest growth are, among others, iron and steel basic metal industry 13.14%; fertilizer, chemical, and rubber product industry 10.51%; and timber goods and other forest product industry 7.67%. Non oil 7 gas industry exports in January – March 2013 reached USD 28.26 billion or contributed 61.1% to total national exports.
He explained that currently the 2013 State Budget (APBN) policy still allocated quite a large amount of budget for energy subsidy, such as BBM. Around Rp193.8 trillion or 11.5% of 2013 APBN is allocated for BBM subsidy, where 50% of the subsidy is enjoyed by the richest people in Indonesia. While, only about 2% of the APBN is allocated for house hold-Based Social Assistance Program, such as Rice for the Poor (Raskin), Scholarship for Poor Student (BSM), Program Keluarga Harapan (PKH), and Community Health Insurance (Jamkesmas). Therefore, the subsidy policy needs to be changed from a commodity price subsidy program to a program more targeted to community groups who are more in need.
He said that policy on the BBM subsidy reduction in the short run will be followed by increase in prices which would reduce the purchasing power of the people, especially the poor and vulnerable house holds. Therefore, a short-term policy initiative is required to maintain the purchasing power of the poor and vulnerable households. Short-term program that will be implemented by the government is Temporary Direct Cash Aid (BLSM) in the form of direct cash grants to the poor and vulnerable households. BLSM will be granted for a period of five months with the amount of Rp150, 000 per month. (E)
Business News - June 12,2013