Power has its Price

(4/24/2010)

Bisnis Bali reports that the Bali Chamber of Commerce (KADIN) is rejecting planned increases in the cost of electricity soon to be imposed across Indonesia. KADIN claims the increased cost of electricity will prove a real burden to the lower economic classes and local industry, warning that the competitiveness of local manufacturers will also be adversely affected by the hike in power costs.

"We reject the plan to increase electrical costs for households and industry, except for houses with power supplies exceeding 10,000 watts," said the chairman of KADIN-Bali, Gede Sumarjaya Linggih on Sunday, April 18, 2010.

According to Linggih, there is no need for the government to increase electrical costs for the lower economic classes and industry. Adding: "Households with more than 10,000 watts are clearly upper class households. These people do not need government subsidies. Please, go ahead and increase electrical charges for this rich class."

Linggih told the press that plans to increase electrical charges has caused widespread concern among Bali's poor and the manufacturing sector.

The proposed price hike comes at a time when Bali and the rest of Indonesia is seeking ways to deal with the added pressure of CAFTA measures creating free trade between ASEAN countries and China. Even in the absence of the increase in electrical charges, many Balinese businesses fear they will be unable to remain competitive with products produced in China.

In order to meet this increased level of competition Linggih argues the government should consider more and not less subsidies for energy cost. Saying present subsidies cost the government Rp. 16 trillion (US$1.7 billion), he argues that subsidized electricity would increase production and manufacturing adding substantially to the nation's tax coffers.