Companies in Batam, Riau Islands Province, are protesting an electricity rate increase that one industry official says will cause 100,000 layoffs next year.
Abdullah Gosse, the deputy chairman of investment and trade at the provincial chamber of commerce, said on Tuesday that the increase was affecting more than 50 percent of all companies in Riau Islands and would likely curb new investment in the region, which is heavily dependent on the industrial sector.
“The hike is not logical,” Abdullah said. “Compared to the 2005 rates, the increase is really burdensome on investors.”
He said workers and investors were planning to hold a protest on Nov. 26 when President Susilo Bambang Yudhoyono is scheduled to visit the province.
The new power rates, which took effect on Sept. 26, are on average 14.8 percent higher for customers with power capacity greater than 2,200 watts of electricity.
Meanwhile, Fachmi Mochtar, president director of state electricity company PT Perusahaan Negara Listrik, or PLN, said that the hike was still reasonable if compared to Singapore, which sits just 15 miles from Batam.
“If we did not increase the rates for industries in Batam, it would create an unhealthy business climate,” he said. “Industries are not supposed to be subsidized anymore.”
In response to the complaints, the government promised to facilitate a meeting between investors and PLN.
“Next week, we will meet with the Riau chamber of commerce to settle the dispute with PLN,” said Jacobus Purwono, director general of electricity at the Ministry of Energy and Mineral Resources.
Increased rates are also being implemented in Tarakan, East Kalimantan Province.
The move marks the latest attempt by PLN to raise power rates by 30 percent before 2010, which the company says will bring Indonesia in line with neighboring countries.
Indonesia’s electricity rate stands at 7 cents per kilowatt-hour, compared with 10 cents in Malaysia, 15 cents in the Philippines and 20 cents in Singapore.