Unwise Decision
Indonesia,
our beloved country, is economically in deficit condition. As the result, our government
makes a decision in order to keep the expense in balance. Their decision is
controversial. It is about the increase in electricity basic price for
industrial. This increase means the
suspension of government subsidy. Since the purpose of subsidy is to help poor
people, and industrial does not belong to this group, they think their decision
is in straight line. Actually, the basic price of electricity for industrial
should not be increased to reduce government expense.
This
decision brings inflation as the first impact. Nurismarsyah in detikfinance.com
stated that the recent study by BI, BPS, and LPEM UI shows inflation that is
caused by rising price of electricity is about 0,15%-0,57%, so in 2012 our
inflation rate will be 5,3%. In this
case the inflation is caused by the hike in production factor prices, and it is
usually called cost push inflation. Electricity as a production factor is
prominent source of energy for our industrial. When the tariff increase, industrial
will face higher production cost because they have to pay more. To keep their
profit normal, they will escalate the price of their products. As the price
rise, we could not buy as many as goods like usual. Then our satisfaction will
decline. Inflation makes people suffer. That is why people said that inflation
is public enemy.
The
other effect is industrial tries to decrease their production cost by reducing
their employee. Franky Sibarani- APINDO (Indonesian Employer Association) vice
president in Indonesia Finance stated that the increase of electricity basic
price causes shoes industrial will fire 395 thousand workers, and textile industrial
will do the same thing to 20% of 20 million workers. Just in two sectors, the
total of people that will lose their job is staggering. Imagine how many people
will lose their job if all industrial sectors oust some of their employee! Joblessness
will be high, and the amount of poverty will be added.
The
last but not least effect that needs to be considered is the collapse of the
industrial itself. When industrial decides not to raise the price of their
products due to tight competition with imported products, they will suffer a
loss. That is because their income is not enough to pay the production cost. As
we can see, there are a lot of products from China that is sold in low-priced
in Indonesia since ASEAN-China Free Trade Agreement (ACFTA) is agreed. If
national products are in higher price than those, people will not buy them.
This is why industrial will not raise the price of their products.
The
decision looks advantageous, but in fact, it is not. When it runs, it causes a
lot of problems for society. Inflation, joblessness and poverty, then the death
of some industrial sectors are several impacts that are caused by this unwise
decision. People will be in low- buying ability. In other words, social cost
that must be paid is really expensive. Thus, government should not increase the
basic price of electricity for industrial.
