Businesses in Indonesia badly hit by severe weather

Extreme weather and the floods that have ravaged several regencies across the archipelago over the past week have hit businesses hard and caused substantial losses.

While the Indonesian Employers Association (Apindo) estimated potential losses amounting to Rp 2 trillion (S$209 million) in Greater Jakarta alone, Land Transportation Owners Association (Organda) said the inundations had increased the costs of transportation operators by Rp 15 billion a day.

Meanwhile, the Indonesian National Shipowners Association (INSA) predicted the losses would be in the "billions of rupiah" as the extreme weather had prevented ships from sailing. "We have to heed the warnings and sail only after receiving permission from the harbour masters," INSA chairperson Carmelita Hartoto said.

Apindo deputy chairman Franky Sibarani said the extreme weather and floods in several areas in Greater Jakarta and Java, including on Java's northern coastal highway (Pantura), had hampered the distribution of finished goods and raw materials.

"Regarding the raw materials, normally the stock should be sufficient for at least one month. With finished goods, including food and beverages, the distribution disruption has caused scarcity of products in several areas," he told The Jakarta Post on Wednesday.

Franky said the extreme weather had hit the food-and-beverage sector hardest with potential losses amounting to Rp 2 trillion in Greater Jakarta for the past week, citing reduced revenues and increased logistics costs as the main causes.

"The government should immediately resolve the annual flooding and should not focus only on flood mitigation projects in Jakarta. Preventing floods on the Pantura is equally important, because it badly affects logistics," he said.

The floodwater inundated several sections of the Pantura at Subang, Indramayu and Cirebon. Motorists have been advised to take Java's southern route to avoid the flooded road, forcing them to make longer journeys, which increases the cost of transportation.

Organda chairperson Eka Sari Lorena said the flooding in Jakarta and on the Pantura had increased the costs of land transportation by Rp 15 billion per day.

"Around 6,000 buses and trucks use the Pantura every day. Due to the flooding along the route, we estimate additional operational costs of Rp 2.5 million for every vehicle per day," Eka said at a press conference.

"This is a rough calculation for the Pantura only, excluding any additional costs arising from engine failure or accidents during the floods. We also haven't calculated the losses in Sumatra and Sulawesi," she said.

Despite the severity of the floods this year, the Association of Indonesian General Insurance Companies (AAUI) estimated its members would pay out lower claims than those paid due to the floods in early 2013, when many of the capital city's main roads, including Jl. Sudirman, Jl. Thamrin and Jl. HR Rasuna Said were submerged.

"Last year floodwater inundated the 'golden triangle' zone, and hit most of the capital's business centers.This year, even though the size of the flooded area is almost the same as last year, it has not submerged the city centre. Therefore, we estimate that claims this year will be lower than last year," Franky said.

Based on AAUI data, insurance companies paid a total of around Rp 650 billion in flood-related claims last year.

The figure comprised approximately Rp 600 billion and Rp 50 million in property and vehicle claims respectively.

The Meteorology, Climatology and Geophysics Agency (BMKG) has warned heavy downpours and strong winds would continue to hit almost every region across the archipelago until next month.