Auto parts makers urge PLN to lower load expense tariff

Auto parts makers urge PLN to lower load expense tariff

JAKARTA (JP): The country's automotive spareparts and
components manufacturers have threatened to discontinue their
electricity power supply from state-electricity company PLN
unless the latter lowers its load expense tariff.

Chairman of the Indonesian Automotive Parts and Components
Industries (GIAMM) A. Saifun said at the weekend the increase of
the load expense tariff by more than 200 percent in May was
unbearable by the industry amid a standstill in domestic demand
due to the economic crisis, which is already a year old.

He said the association had conveyed the request to cut the
tariff through the Director General of Chemical, Machinery, and
Metal Industry, but had yet to receive a reply.

"If the government doesn't come out with any solution, we'll
have to stop the electricity supply from PLN, or we'll all be out
of business," he told The Jakarta Post at the weekend.

He added that other industries had also asked for the
reduction in the load expense tariff.

The government increased the country's electricity tariff in
May by an average of 20 percent.

Saifun explained that an industry using a load burden of
13,710 kilo Volt Ampere prior to the tariff increase was charged
Rp 5,060 per kVA in load expense. After the May increase, the
tariff soared to Rp 16,000 per kVA, or an increase of 216
percent.

PLN has suffered huge financial losses and is reportedly on
the brink of collapse because it was forced to purchase power
from politically well-connected private power producers at high
prices.

Saifun said the country's economic crisis had badly hit the
auto parts and components industry as the first fallout from the
reduction in people's purchasing power was the automotive sector.

Of GIAMM's 125 members, only about 20 percent were still
active, he said.

He explained surviving firms were those which could manage to
export their products, especially to Europe, the Middle East and
the U.S.

"The exporters managed to boost their turnover by up to 150
percent."

Many of the country's auto parts makers could not export their
products to those markets because the focus of exports in the
past was Southeast Asian and Japanese markets, which had also
shrunk due to the same economic crisis, he said.

He acknowledged the U.S. market had vast potential as the
country imported about US$165 billion annually in auto
spareparts.

But the market was controled by the Big Three: General Motors,
Ford and Chrysler, which were not easily convinced by foreign
exporters which had no track record, he explained.

He added that to enter the U.S. market, outside exporters
needed to pass the QS 9000 U.S. standard quality.

"We're currently trying to cooperate with GMBI (GM's
Indonesian operation unit) to penetrate the U.S. market," he
said.

He explained that during the precrisis period, about 60
percent of GIAMM's members relied on the domestic market with an
annual turnover reaching Rp 6.6 trillion ($440 million).

"Those which hasn't any export market have completely stop
manufacturing." (rei)