Wed, 24 May 2000

Textile firms threaten to shut down

BANDUNG, West Java (JP): Some 200 textile companies in the West Java chapter of the Indonesian Textile Association (API) threatened on Tuesday to stop production if the electricity rate hike was not revised within a week.

Secretary of API's West Java chapter Ade Sudradjat said the threat was issued after negotiations between the association's members and the West Java branch of the state-owned electricity company (PLN) failed to reach a compromise.

He said the companies were willing to pay the full rate if the government would agree to their proposal for a gradual hike.

API proposed gradual implementation of the hike, with 20 percent now and an additional 16 percent in six months, Ade said.

"We would accept a 36 percent increase for this year. Then next year another gradual increase," he said.

Steel and textile-related industries have also protested the increase.

The government raised the electricity rate an average of 29.43 percent beginning in April in a bid to reduce the Rp 13.7 trillion (US$1.83 billion) losses faced by PLN this fiscal year.

The rate for industrial users rose between 54 percent and 70 percent.

Spokesman for the local office of PLN Sri Djoko MK said the company could not alter a presidential decree.

"We are a state-owned company with the government as a major shareholder. The board of directors cannot make any changes to a presidential decree on their own."

Companies have argued the government's decision to increase electricity rates is burdensome to their operations.

They complained that many of them did not prepare the budget because they only received notice from PLN at the end of April, weeks after the decree took effect.

The hike, the minimum wage increase and the weakening of rupiah to the dollar would further drain the companies' finances, they said.

President director of export-oriented textile company PT Himalaya Bandung Husen Lumanta warned that if the government did not revise the decree, his 5,000 employees would be laid off in three months to six months. (10/25)