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Fuel subsidy cuts to affect Indonesian textile firms

02
Mar '12
The proposed fuel subsidy cuts by the Indonesian Government are likely to hit the textile industries in the Southeast Asian nation.

The textile industry in Indonesia is one of the largest contributors to the country's GDP growth, and is also one of the most vulnerable to hike in fuel costs, according to Dedi Mulyadi, Director General for Industrial Zone Development in the Ministry of Industry.

The textile industry is a large consumer of fuel and electricity, but the Government provides support to the industry by giving fuel subsidies, in the midst of rising crude oil prices.

However, the Ministry of Energy and Mineral Resources is now considering raising the price of fuel from the current Rp 4,500 per litre to Rp 6,000 per litre.

If the proposed cuts in fuel subsidy are passed, the textile industry would have to downwardly revise its current year's growth rate, from the earlier projection of 7.1 percent, Dedi said.

Fibre2fashion News Desk - India


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