Indah Handayani, Jakarta – Business groups have warned that recent power outages across Java could disrupt industrial production, weaken supply chains and undermine investor confidence in Indonesia, as the government scrambles to stabilize electricity supplies following coal shortages at power plants.

The concerns emerged as President Prabowo Subianto summoned executives from state utility PLN to the Presidential Palace on Monday to address a series of electricity disruptions that affected several regions in Java, Indonesia's economic and industrial heartland.

The outages, linked to coal supply shortages and technical problems at several power plants, affected areas including Greater Jakarta, Cianjur, Semarang and parts of Madura. The disruptions exposed vulnerabilities in Indonesia's power supply chain despite the country being one of the world's largest coal producers.

Erwin Aksa, vice chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said the outages could have significant economic consequences because Java serves as the center of the country's manufacturing, trade and services sectors.

Manufacturing companies, food and beverage producers, textile firms, logistics operators, data centers and small businesses have all reported operational disruptions, according to Kadin.

"Companies not only lose production hours, but also face higher operating costs because they must rely on generators and backup energy sources to maintain business operations," Erwin said.

Kadin said it is collecting data from businesses across the country before estimating the nationwide economic impact. Losses include production stoppages, delayed shipments, supply chain disruptions and higher operating expenses.

Industry associations warned that prolonged outages could reduce factory utilization rates and threaten Indonesia's industrial recovery.

Fajar Budiyono, secretary general of the Indonesian Olefin, Aromatics and Plastics Industry Association (Inaplas), said plastic manufacturers are particularly vulnerable because many plants operate continuously around the clock.

Factories connected to medium- and high-voltage networks typically run 24 hours a day and may require three to seven days to fully restart operations after a shutdown, resulting in substantial financial losses, he said.

Small and medium-sized manufacturers are also among the hardest hit. Production interruptions often force companies to discard semi-finished goods and raw materials, increasing waste and reducing efficiency.

Indonesia's downstream plastic industry has recently improved its utilization rates to around 60 to 65%, but Fajar warned that persistent electricity disruptions could reverse those gains.

"If this situation continues, utilization rates that have started to recover will decline again. The impact will eventually affect consumer purchasing power and economic growth," he said.

The Indonesian Employers Association (Apindo) called on the government to strengthen the reliability of the national electricity system through a comprehensive review of reserve margins, power plant reliability, transmission networks and emergency response systems.

Business groups also urged PLN to provide earlier warnings and clearer communication to industrial customers so companies can adjust production schedules, secure raw materials and minimize losses.

The recent disruptions have been partly attributed to shortages of medium-grade coal used by power plants. PLN requires approximately 154 million metric tons of coal annually but has secured contracts for only around 134 million tons, leaving a supply gap of roughly 20 million tons.

To address the issue, the government has established a task force to secure coal supplies for power plants and is considering adjustments to Indonesia's domestic market obligation policy, which currently requires coal producers to sell coal to PLN at a capped price of $70 per ton, significantly below international market prices.

Business leaders said the episode serves as a reminder that reliable electricity infrastructure remains essential not only for industrial production but also for maintaining Indonesia's competitiveness as an investment destination.

"For investors, certainty and reliable infrastructure are critical," Erwin said. "The reliability of the national electricity system is a strategic factor in maintaining Indonesia's economic competitiveness and investment confidence."

Source: https://jakartaglobe.id/business/indonesia-power-outages-threaten-industry-raise-investor-concern