Non-Subsidized Gas Price Hike Reduces Small, Medium Businesses' Turnovers

Surabaya, E Java (Antara) - The Surabaya chapter of the Indonesian Chamber of Commerce and Industry (Kadin) has predicted that the recent price hike of non-subsidized LPG in 12-kilogram cylinders may reduce the turnover of micro, small, and medium businesses. "The price of LPG in 12-kilogram cylinders and electricity tariff had both been raised in the second semester of this year, thereby marginalizing the purchasing power of consumers," chairman of the Kadin chapter Jamhadi reported here on Tuesday. He expressed belief that the purchasing power will decline by 15-20 percent for a certain period of time. "The price hike is burdensome to micro, small, and medium entrepreneurs, particularly those engaged in the food and beverage industry," he added. Meanwhile, chairman of the Indonesian Cafe and Restaurant Association (Apkrindo) of East Java chapter Tjahjono Haryono stated that the increase in subsidized LPG price and electricity tariff has had no impact on the purchasing power of consumers. "In the second semester of this year, the increase in electricity tariff only applies to households with 1,300 VA of electricity and above," he said. In general, consumers of LPG in 12-kilogram cylinders belong to medium and upper class communities. Therefore, he expressed optimism that the government policy will not disturb the consumption pattern of the community. "At present, purchase of food stuff is not merely a life style but also a need," he noted. On September 10, the government had raised the price of LPG in 12-kilogram cylinders by Rp1,500 per kilogram to curb state oil and gas company Pertamina's losses from the sale of non-subsidized LPG. With the increase, the average price of LPG in 12-kilogram cylinders from Pertamina had gone up to Rp7,569 from Rp6,069 per kilogram. However, the price hike is still far from the economic price of above Rp10 thousand per kilogram. Therefore, Pertamina will increase the price of LPG in 12-kilogram cylinders by another Rp1,500 per kilogram in January 1, 2015. (*)