Indonesian Textile Growth Sluggish Owing to The Planned Increase in Electricity Power

The Indonesian textile industry growth prospects are estimated to remain sluggish during the 2014 year, owing to the planned increase in electricity power next year, said Benny Soestrisno, chairman of the advisory board of the Indonesian Textile Association (API).

Mr. Soestrisno said the rise in electricity tariffs goes against the Government’s aim to improve competitiveness in domestic industries, especially during the phase of ASEAN Economic Community (AEC), which will take effect from 2015, reports The Globe Journal.

According to the API official, the plan to raise electricity tariffs next year would undercut the competitiveness of the manufacturing industry, especially textiles. The electricity tariffs would automatically affect the production costs which are expected to rise by 3 to 4 percent.

Moreover, the API official said investments in the textile industry next year would also be stagnant due to the Bank of Indonesia’s decision to raise its benchmark interest rate, which would hamper the arrival of foreign investors in Indonesian textiles.

However, Mr. Soestrino said textile and apparel sector would experience significant growth in exports during 2014, owing to the improvement in the economies of countries like the US and Europe.

The Government of Indonesia raised electricity tariff by 15 percent in 2013, and plans to increase the electricity price starting early 2014 as well as withdraw power subsidies from four groups of customers—large households, medium-sized businesses, large sized business and medium-sized government offices.