Hotel and textile sectors fear hike in fuel prices
Hotel and textile sectors fear hike in fuel prices
JAKARTA (JP): The hotel and textile industries, two sectors on
the front line of Indonesia's export thrust, will be severely
hurt by the government's plan to increase domestic fuel prices by
up to 20 percent in April, executives from the two industries
told The Jakarta Post on Friday.
Sugeng Setyadi, senior executive at the Indonesian Hotel and
Restaurant Association (PHRI), and Irwandy Muslim Amin, executive
director of the Indonesian Textile Association (API), said the
increase would undermine Indonesia's ability to compete in the
global market.
The government, under pressure to plug a huge budget deficit,
has begun to sound out the planned increase, while not ruling out
the possibility of a delay in its implementation on April 1
should there be massive public opposition. The Ministry of Energy
and Mineral Resources has also disclosed the possibility of
introducing the 20 percent increase in several phases.
Sugeng contends that the fuel price increase would set off a
chain reaction on other domestic cost components, which account
for 60 percent of total operating costs.
"After fuel, the cost of basic commodities and workers'
salaries come next. But we can't increase the hotel tariff just
like that," said Sugeng, who heads the association's manpower
department.
Hotels would prefer to maintain their tariffs so that
Indonesia's tourism industry remains competitive, he said.
Some hotels are also obliged to maintain their rates under
contracts negotiated with travel agencies and large customers, he
said.
The increase in fuel prices would be an additional burden for
the industry on top of possible increases in electricity rates
and land and property taxes later this year, he added.
To ease the hotel industry's woes Sugeng suggested that the
government provide some form of tax break.
Irwandy said the fuel price hike would be likely to force
textile manufacturers to increase their prices, which in turn
would render them less competitive in the export market.
In the fiber and spinning sectors the increase could be as
large as 30 percent, while in others, like the garment sector,
the increase would be smaller, he said.
The fuel cost increase comes at a time when the textile
industry is facing a tighter market because of the slowing down
of the United States economy, Indonesia's largest market.
The government is also considering forcing Indonesia's export-
oriented companies to pay fuel prices at world market rates. If
this idea were to be approved it could mean that exporters,
including those in the textile industry, will face fuel cost
increases of up to 400 percent. (05)