Labor union protests AAF closure plan

Labor union protests AAF closure plan

The Jakarta Post, Jakarta

A labor union is protesting the government's plan to close down
fertilizer manufacturer PT Asean Aceh Fertilizer (AAF), calling
for efforts to seek alternatives.

The Worker's Union of State-owned Enterprises Federation said
it refused such a plan because the Aceh-based firm had made
significant contributions to both the local and national economy.

"The presence of AAF here has benefited us by creating a very
conducive environment for the economy, which has resulted in
higher revenues for the central government," federation chairman
Abdul Azis Hasan argued in a press statement.

The government wants to shut down AAF, which stopped operating
in August last year, because existing and future natural gas (a
key raw material for the fertilizer firm) production in the
province was considered insufficient to cover both export
commitments and the needs of other manufacturers there.

Abdul said since it started operation in 1979, AAF had
contributed to the development of various economic sectors in the
province such as employment, trade and small- and medium-sized
enterprises.

"Besides, the Law No. 22/2003 on Oil and Gas says a maximum of
25 percent of gas output in the country must be allocated for
domestic industry, while (in reality) we have only got 11
percent. If the government can save AAF, it will be a good
example of how it prioritizes domestic business," he added.

The federation hopes the government will try to look at
alternative sources to ensure a supply of natural gas for AAF.

Fertilizer firms in Aceh have been striving to survive due to
gas supply problems as reserves from the main field, Arun, in the
region are dropping, while existing reserves are converted into
liquefied natural gas (LNG) and exported to Japan and South
Korea.

The government has said however, that the proposal to shut
down AAF still had to take into consideration of other
shareholders -- from Malaysia, Thailand, Singapore and the
Philippines.

It also will continue the operations of two other fertilizer
firms in Aceh: PT Pupuk Iskandar Muda I and II.