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)