INDONESIA: Garment makers to be hit by planned power hike
Indonesia saw electricity prices rise four times last year
A planned increase in electricity tariffs in Indonesia has sparked concern in the garment industry that it will raise production costs, which may affect the industry's competitiveness in export markets.
Asep Setiaharja, vice secretary general of the Indonesian Textile Association (API), said that the upstream end of the garment production chain will bear the biggest brunt of rising electricity costs.
"The increase of electricity tariffs mostly hits upstream industries such as man-made fibre manufacturers and spinners who are more energy intensive than their colleagues of fabric and garment manufacturers," he told just-style.
The government plans to raise electricity prices by 38.9% for industries that use medium-voltage power, including garment and footwear manufacturers, and by 64.7% for industries that use high-voltage power. The plan is slated to go into effect on 1 May.
The API has sent a protest letter to the ministers of energy, industry and finance, according to Asep. Several other industries have also publicly protested the tariff.
Indonesia saw electricity prices rise four times last year, and the minimum wage was increased by an average of 18% last year across various Indonesian provinces following worker protests.
Asep said higher production costs would also filter through to the clothing sector. "Through a multiplier effect it may also cause a little interference to the downstream industries since there will be higher prices of domestic textile fibres and yarns."
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