Indonesia: Power Cuts Affect Business

Updated On: Jul 10, 2008

Manufacturers in Indonesia are facing power cuts and brown outs. In a public sign of unhappiness, a Japanese industry group lodged a protest with the Indonesian government and the state-owned power utility company over the recent series of power blackouts.
The Jakarta Japan Club (JJC) said the frequent blackouts were likely to have "substantial effects on the future business of the companies" in Indonesia. According to a JJC survey of its 414 members across the country in May to June, about 42 companies had suffered accumulated losses worth Rp 41 billion (US$4.444 million) because of the frequent blackouts. The survey found that businesses had experienced on average three days of blackouts, with a maximum of six days. The survey also revealed that in the majority of cases, the businesses experienced power cuts without any advance notification, causing sudden halts to production processes.
State-owned power utility company PT Perusahaan Listrik Negara (PLN) has repeatedly attributed the power failures to shortages in the supply of coal and gas to its power plants. In some cases, PLN blamed the weather for delays in coal shipments to its plants.
The government is revealing a new regulation of the operating hours for manufacturers that will come into force in October. The regulation requires businesses to move two of their working days to Saturday and Sunday.It will apply to all manufacturers, except those that must operate 24 hours a day.
Moving businesses' working days to the weekend is necessary because there are about 1,000 megawatts of idle power capacity on Saturday and Sunday, the government said. Businesses that violate the new schedule for operating hours will suffer temporary power cuts, whereas those that comply will receive incentives The regulation will also include incentives for companies that shift their operating hours, to be decied by PLN.
Some commentators support the move as being a necessary short term measure for the current power shortage. Other idustry associations said the decree would lower their productivity because they needed to recalculate their daily production and would harm workers relying on overtime payments. There are concerns this will affect foreign investment and Indonesia’s competitiveness.

Sources: Jakarta Post, 10 July 08, Japanese firms lodge protest over blackouts and Firms to change operating hours or face power cuts

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