"The production cost this year will increases by about 20 to 25 percent."
Jakarta (ANTARA News) - The Indonesian Chamber of Commerce and Industry (Kadin) said businesses had calculated their production cost which this year would increase by about 20 to 25 percent.

"The production cost this year will increases by about 20 to 25 percent. Production cost continued to increase such as what happened last year but there was no solution from the government," Kadin Deputy Chairman for Trade, Distribution and Logistics Affairs Natsir Mansyur said here on Wednesday.

He said that the increases in the regional minimum wages and the electricity tariff rates had been taken into account in calculating the production cost.

Natsir said that the government should solve soon the problems of increasing production cost because it concerned competitive edge against foreign (goods). "Indonesia`s image could be seen from the production cost of its products," he added.

He said that there should be a balanced policy to help the declining competitiveness of goods. "There must be equilibrium, if wages are raised, the power rates must be lowered. If both are raised it would kill us," Natsir added.

The Kadin chairman said that the good economic growth of Indonesia should have supporting factors such as significant manufacturing and agricultural products.

But in reality Indonesia`s manufacturing and agricultural products did not increase. As a result, the imports of capital goods and raw materials, including consumption goods, flooded the country.

"If the country`s economic growth reaches 6.8 percent, the rate is significantly high but our manufacturing and agricultural products do not increase, then we would remain to import goods. We will continue to import if we are not able to get ready with domestic production," he added.

Kadin is of the view that the country`s trade deficit is now already in the emergency condition. The government should be cautious in managing its trade balance.

Based on the Industry Ministry`s data, Indonesia`s trade deficit showed a bad level, reaching 1.3 trillion dollars (up to November 2012). This was because the growth of imports was always bigger than that of exports.
(Uu.A014/H-YH)

Editor: Priyambodo RH
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