The Indonesia Government reduces the country’s fuel-subsidy program by increasing of the subsidized fuel prices. The new price for Premium gasoline is Rp 8,500 (69 US cents) per liter, up from Rp 6,500, while diesel sells at Rp 7,500 per liter, up from Rp 5,500.
Presiden Joko Widodo (Jokowi) said the government was raising of the subsidized fuel prices so it could increase funding for sectors that were more beneficial to the Indonesian people.
However, the higher subsidized fuel prices effect the craft sector in Indonesia driving up production costs. The increase in fuel price will increase labor costs, the cost of purchasing raw materials and transportation costs
The increased production costs will be a burden to the producers, especially as they face competition in the ASEAN Economic Community in 2015.
Producers have to develop new strategies to improve the quality of products with a more efficient production costs.