Poor Indonesians impacted significantly by power tariff hike

12:26, June 19, 2010      

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Poor Indonesians will be affected significantly by power tariff hike effective on July 1 although they are not included in the target of the increase, a prominent economist told Xinhua in a recent interview.

Hendri Saparini, economist and director of Econit Advisory Group, a leading think-tank institution for economy, trade and industry, said that poor people will indirectly be impacted as they have to spend more to buy food and other items that are predicted to have prices increased.

The government has decided to increase power tariff for customers with an exception of people who subscribe for power of 400-900 volt ampere (VA).

"Industry and business sector, including food sector, is one of targets eyed by the increase aside of high income society. They have to minimize decreasing profit by increasing product price. On the other side, the biggest spending by poor people is for food," said Hendri.

Another thing is, she said, as industry and business sector are forced to increase price, it would make their products less competitive and they will face difficulties to expand.

"Decreasing profit will affect their employees who are subscribe for power of 400-900 VA, mostly from low to middle class society," said Hendri.

She said that the government must think the possibility, not just saying that inflation will increase by 0.4 percent.

"There are things that should be considered before rising power tariff," she said, adding that industry and business sector should be exempted from tariff hike.

He said that based on recent study by the Central Bureau of Statistic and the Asian Development Bank (ADB), low income people will be affected 2-3 times of general inflation.

Previously, the government said that burden carried by the country's revised state budget 2010 will increase by 5 trillion rupiah (about 550.35 million U.S. dollars) to subsidy power for people.

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