Oil Price Drop Brings Multiple Effects on Economy

Jakarta, InfoPublik – Indonesia Industry Minister Airlangga Hartanto ensured if the gas price for industry is decreased, it will bring positive multiplier effect on national economy including industry growth, employment and foreign exchange saving.

"We are proposing a decrease in gas price for industry and adding industrial sectors affected by gas price regulation. This is one of the efforts to improve the competitiveness of national industry," Airlangga said after a coordination meeting on gas prices for industry in Jakarta, Monday (15/8).

According to Airlangga, gas usage in industrial sector contributes significantly to production cost. "If the gas price for industry can be lowered, the production cost will automatically be reduced," he said.

The minister said industrial players expect competitive gas prices compared to  those in other countries, especially in ASEAN so as to compete in domestic and global market.

"Industry expects the gas price to be based on economic value which is about 3 to 4 dollars per million metric British thermal units (MMBtu)," he said.

Based on data from  Industry Ministry, the average gas price for  industrial sector is still high at US$ 9.5 per MMBtu. Fertilizer industry and petrochemical industry are charged for gas at US$ 6.28 to 16.7 per MMBtu . Gas is a major component inthe structure of production cost reaching 70 percent of the total production cost. (Translator: Sugiarti)