Food And Beverage Entrepreneurs Reject Government Plan To Increase Electricity Rates By 20 Percent

General Chairperson of Gapmmi Adhi Lukman. (Photo: Twitter @Adhi_Gapmmi)

JAKARTA - The Association of Indonesian Food and Beverage Producers (Gapmmi) expressed objections to the government's plan to increase the basic electricity tariff (TDL) by 20 percent in the near future.

General Chairperson of Gapmmi Adhi Lukman said the policy changes and new policy adjustments have the potential to increase production costs, and will provide additional burdens that greatly affect the sustainability of the food and beverage industry (mamin).

"As an industry that provides people's daily needs, the food and beverage industry is very vulnerable to situations caused by the pandemic and any policies that will be taken by the government," he said in a written statement, Tuesday, June 29.

According to Adhi, business actors are trying to survive in the midst of declining employee health which has an impact on work productivity, weakening people's purchasing power, logistical challenges and rising world food commodity prices.

"For that we ask the government to review the plan wisely," he said.

Adhi added, at a macro level, the policy will more or less affect GDP (gross domestic product), household consumption, and inflation. This is because household consumption is one of the main drivers of the national economy.

Meanwhile, in terms of sector, he said, the increase in TDL is believed to have a negative impact on industrial output and the competitiveness of domestically produced products as well as burdening consumers.

"With a situation like this, if it is true that the policy will be implemented by the State Electricity Company (PLN), this will be a very heavy blow and burden for the food and beverage industry. So far, electricity costs have contributed about 3 percent of the cost of production," he explained.

He also calculated that if the electricity load increased by 20 percent, the production cost of the food and beverage sector would increase by 0.6 percent.

"This increase in production costs will inevitably affect product prices, which will increase, where food and beverage products are very price sensitive," he added.

Therefore, Adhi hopes to review the plan to increase the TDL, especially with the issue of rising food commodity prices in the near future. For information, state administrators through PLN are planned to implement a new electricity tariff scheme starting July 1.

"It will be more beneficial for the national economy if the government can increase production efficiency in the electricity sector because it can have a very positive impact on other economic indicators," he concluded.