The Jakarta Post, Surabaya/Jakarta
The prices of several products, especially steel-based products and the cost for housing construction, might soon increase markedly as the result of the recent move by state oil and gas company Pertamina to raise fuel prices for selected industries, businessmen have warned.
Pertamina, which adjusts fuel prices to the international market level every month, has decided to keep fuel prices for the public unchanged this month.
However, it raised the prices for selected industries, including oil, gas, mining, geothermal energy, cement, basic metals and steel.
"The fuel price increases will directly affect the final sales price. It will make goods more uncompetitive amid rampant smuggling," Alim Satria, Director of Maspion group told The Jakarta Post on Tuesday.
Producers of metal, steel and aluminum goods must increase the prices of their goods to cover the rising costs as a result of the rise in the prices of raw materials.
Surabaya-based manufacturing company Maspion Group makes consumer durable goods and household appliances using materials such as aluminum, stainless steel, metal and enamel.
Alim said the rise in the fuel prices will add to the burdens of the industry which has been struggling to compete with relatively inexpensive imported goods.
Under the new pricing scheme, Premium gasoline for the selected industries will now cost Rp 2,100 per liter, up from Rp 1,930 last month, while the price of kerosene and automotive diesel oil has been raised to Rp 1,980 and Rp 1,910 per liter from Rp 1,800, and Rp 1,720, respectively.
The price of industrial diesel fuel is now Rp 1,880 per liter, compared to Rp 1,710 last month, while fuel oil now costs Rp 1,600 per liter, as compared to Rp 1,570 last month.
The property sector will also likely be affected by the new fuel prices.
Adri Istambul Lingga Gayo, the head of real estate department of Indonesian Chamber of Commerce (Kadin) East Java chapter said the fuel price increases will mean a housing price jump of 10 percent to 15 percent.
He said it would affect the price of housing materials such as nails, cement and sand.
"Developers will be forced to increase operational costs to construct houses," he said.
Thomas Darmawan, executive director of Food and Beverages Industry Association said although the policy does not have a direct impact on the industry, it will prompt food and beverages companies to raise prices of their products.
"Food and Beverages companies could not raise their price in the past because of SARS, the Bali bombing, and the war in Iraq. So, this provides them with a reason to raise price of their products," he said.
He was referring to the downturn in the travel-related sector which was adversely affected by the spread of flu-like epidemic Severe Acute Respiratory Syndrome (SARS), Bali bombing in October last year and the war in Iraq early this year, all of which required that they keep prices stable to remain competitive.
In addition, food and beverage companies are preparing for an expected increase in demand ahead of several holidays, including the Ramadhan which will begin in late October.
"But the price increases will not be much... only around 5 percent," he said.