Price Increases of Industrial Fuels Reduce Competitiveness
Wednesday, 03 January, 2007 | 17:07 WIB

Tempo Interactive, Jakarta: The government considers that the price increases of fuels for the industrial sector in January 2007 will reduce production competitiveness.

Both the steel and textile industries will experience the impact of these fuel price increases.

Ansari Bukhari, Director of Metal, Machinery, Textile, and Multifarious Industry at the Department of Industry, said that the role of energy in the cost structure of the steel and textile industries was extremely high.

As a result, he said, the rise of these fuel prices will decrease manufacturing productivity.

“The cost structure of steel industry is between 22 and 23 percent whereas in the textile industry it is around 13 percent,” Ansari said yesterday (01/02).

He explained that high cost components would increase production costs and result in a decrease of product competitiveness.

“However, the decreases are not always equal to the cost structure,” said Ansari.

PT Pertamina (Persero), as of 1 January 2007, has increased the price of its industrial fuels.

Industrial kerosene's price has been increased by 4.9 percent; industrial diesel oil by 0.5 percent; and premium by 1.9 percent.

“We recommend companies to use energy more efficiently,” said Ansari.

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