"An increase in the price of electricity will increase the citizens` burden," said Fadli on Friday.
The Ministry of Energy and Mineral Resources had issued a regulation to increase the price of electricity by 15 percent gradually, for households with power consumption of over 900 W and several industrial sectors.
"If this policy has been implemented to reduce power subsidies, it may not be successful because the policy will have a number of multiplier effects," said Fadli, adding that some industries will increase the cost of their products because of an increase in the cost of production.
"If there is no demand for expensive products, there is a possibility that many workers will be laid off," he said.
Fadli also said the multiplier effect of power tariff hike will lead to inflation if the government fails to increase the state revenue.
Meanwhile, an economist at the Indonesian Institute of Sciences (LIPI), Latif Adam, said the electricity tariff hike will increase the rate of inflation by approximately 0.3 percent.
"The cost of production will increase because of an increase in the price of electricity and an increase in worker's wages," he explained.
He said an increase in the wages of workers and a decrease in the value of the rupiah will increase commodity prices. This will lead to inflation.
(O001/KR-BSR/O001)
Editor: Jafar M Sidik
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