An exhibit at Glasstech Asia 2019. (JG Photo/Diana Mariska)

Gas Prices, Glass Ceiling for Local Glass Makers


NOVEMBER 13, 2019

South Tangerang, Banten. A glass business lobby group has urged the government to be more consistent in its implementation of gas price regulations to support local glass manufacturers and regain investors' trust in the industry.   

According to the lobby group, high domestic gas prices have eroded the industry's competitiveness in the global market and also in the local market, where it has to compete against imported sheet and safety glass. 

"We long for similar incentives offered to other businesses. But generally, our main concern is the price of gas," Yustinus Gunawan, the chairman of the Sheet and Safety Glass Association (AKLP), said. 

He was speaking on the sidelines of the Glasstech Asia 2019 and Fenestration Asia 2019 joint exhibition in South Tangerang on Tuesday.

State-controlled gas company Perusahaan Gas Negara (PGN) had announced a plan to increase the price of gas on Nov. 1 to keep up with increasing costs since the company has not increased its gas price since 2013.

The government, however, vetoed the plan.

"We continue to tell investors to never stop investing. But when they do, they question me about the presidential regulation," Yustinus said, referring to a 2016 presidential regulation (Perpres) that fixed an industrial gas price of $6 per metric million British thermal unit (mmbtu) should the cost of producing gas fall below that benchmark.

Local glass manufacturers have been buying gas at around $10 per mmbtu in the past few years, while their competitors in Malaysia, for example, have been paying half the price, data from the Industry Ministry show.

The Energy and Mineral Resources Ministry has the discretion to adjust industrial gas prices.   

"We really hope the presidential regulation could be implemented properly to regain the trust of investors," Yustinus said. 

Dody Widodo, a special advisor at the Industry Ministry, said the government had prepared several incentives to help the manufacturers reduce their costs. 

"One of our programs is super deduction tax, [which cuts tax by] up to 200 percent," Dody said, referring to a policy that allows companies to claim their employees' training costs by up to three times the real cost in their tax return. 

"We also have a tax allowance and other incentives. However, a lot of investors don't have detailed knowledge about them," Dody said. 

"The glass industry has a lot of potential. The government wants to encourage glass manufacturing for export, not only household glass but also glass for the automotive and weapon industries. For example, a company in Indonesia is already producing bulletproof glass, and we see that as an opportunity to bring more [investment] in," Dody said.