Korean firm requested to review govt's hiking fuel price policy

25 Aug '05

2 min read

A Korean company PT Hanil Indonesia is incapable to work in Indonesia due to policy of fuel price hike, which is to be implemented on August 1, 2005 by the Indonesian government for industrial fuel.

The company was established in 1992 with a US$70 million venture capital in Boyolali, Central Java for yarn spinning. Today it occupies 2,000 workers with the facility of 64,800 spindles; it manufactures 90 percent of its products for exports and reserves 10 percent for local market.

With the cost-price distinction of $1-$2cts/kg at present, the world market is passing through the stiff competition. In order to cutthroat competition companies are intending to offer at $1ct/kg, so that they attempt to decrease their cost price by $1ct.

Today, the Chinese firms are controlling the global textile market. China this year had no cost increases and today its Yuan deflation origins only a $1ct cost rise to competitors in China. . By this mode of operation, Chinese firms can still overwhelm its influence and can continue their business operation.

The sudden 149 percent fuel price hike generates major challenges to sustain and operate these types of firms in Indonesia. Therefore, the fuel price hike should be again reviewed by government because the textile industries like PT Hanil Indonesia are facing tremendous trouble for operation says Park Chang Jun, President Director, PT Hanil Indonesia, Jakarta.

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