A number of textile entrepreneurs are worried about the government's decision to increase the price of fuel oil (BBM), the types of Pertalite and Solar by more than 30 percent. The increase in fuel prices will reduce people's purchasing power. General Chairperson of the Fiber and Filament Yarn Producers Association (APSyFI) Redma Wirawasta said the increase in fuel prices would greatly affect the company's logistics because it relies on Solar and Pertalite. This will then raise the price of goods and reduce people's purchasing power.
"It's not just that the problem, what we are more worried about is the people's purchasing power, because the logistics are all going up, all prices are going up, especially food prices," he said, Sunday, September 4, 2022.
As a primary need, people will focus more on spending their money on food than on other things, such as products made from fiber and yarn.
"We are worried about the weakening of purchasing power, because they will definitely focus on food, eventually there will be a decline in textile consumption," he continued.
Redma revealed that even before the increase in fuel prices for textiles, there had been a decline during August 2022 due to the market being dominated by imported goods. In fact, said Redma, several entrepreneurs have stopped production due to stockpiles that normally last for two weeks have now accumulated up to one month.
"Yes, if we have one month's stock, we don't have cash flow reserves to buy raw materials, if the upstream ones can't be sold, we stop production," he explained.
Thus, the government's decision to increase fuel prices will definitely put pressure on the textile industry, which was already under pressure from the flood of imported products.
Textile Industry Double Pressure
In line with Redma, Secretary General of the Indonesian Textile Association (API) Rizal Tanzil Rahman is worried about the decline in purchasing power and hopes that the price of fuel, especially diesel, can return to what it was before.
“The increase in fuel prices will certainly have an impact, especially in terms of logistics, because diesel fuel increases. I really hope it doesn't go up because the conditions are not yet fully good," he explained.
As previously reported, as of September 3, 2022, the price of Pertalite rose from Rp. 7,650 to Rp. 10,000/liter. Then the price of subsidized diesel rose from Rp. 5,150 to Rp. 6,800/liter. Pertamax also increased today from Rp 12,500 to Rp 14,500/liter.
Responding to the increase in fuel prices, Deputy Chair III of the Indonesian Chamber of Commerce and Industry (Kadin) Shinta Widjaja Kamdani revealed that the impact would be universal for all sectors and businesses, depending on the scale of business.
“The impact of the fuel price hike is universal for all sectors and business scales. Even if it is not directly affected by overhead costs [usually on the logistics/transportation expense component], almost all business actors will be affected in terms of adjustment/decline in people's purchasing power," he explained, Sunday, September 4, 2022.
For example, explained Shinta, in the service sector, it is most likely that the biggest impact will be the transportation, logistics, travel/tourism services, or the trade sector.
Meanwhile, the impact of the increase in fuel prices will begin to be seen in the next one to two months while monitoring inflation conditions as a result of the government's decision.
"Many companies also need to test the water both to contain the increase in selling prices and to increase the selling price to ensure that the effect on the company's performance can be mitigated," he continued.