Jakarta \u2013 The Indonesian Employers\u2019 Association (Apindo) has stated\nthat it continues to monitor the escalating conflict between the United\nStates and Israel against Iran, which risks spreading throughout the\nMiddle East region. The business community assesses that conflict risks\nextend beyond market sentiment to include potential energy price spikes,\nexchange rate pressures, and fiscal burdens on the state.<\/p>\n
Deputy Chairman Apindo Sanny Iskandar stated that the primary risk\nstems from potential disruptions to global energy supply routes,\nparticularly the Strait of Hormuz, which represents one of the world\u2019s\nkey energy trade bottlenecks.<\/p>\n
\u201cApindo continues to closely monitor the escalation of US-Israeli\nattacks on Iran that could spread into a regional conflict in the Middle\nEast. The main risks do not only come from market sentiment but also\nfrom the potential for disruptions to global energy and trade routes,\nparticularly in the Strait of Hormuz region, which is one of the world\u2019s\nkey energy trading bottlenecks, with approximately 20 per cent of the\nworld\u2019s oil passing through this area,\u201d Sanny told CNBC Indonesia on\nMonday (2 March 2026).<\/p>\n
According to him, even without physical closure of the route,\nuncertainty alone can drive increases in the risk premium on oil and gas\nprices and international logistics costs.<\/p>\n
\u201cBusiness operators\u2019 concerns at present are rising risk premiums on\noil and gas prices, as well as increases in international logistics\ncosts. Even without physical closure of the route, uncertainty alone can\ndrive spikes in global energy and logistics costs,\u201d he explained.<\/p>\n
Indonesia, as a net oil importer, faces pressure that could\npotentially increase production costs and narrow fiscal room, should\nglobal energy prices rise above budget assumptions, according to\nSanny.<\/p>\n
According to him, Indonesia is vulnerable to energy price spikes. If\nprices remain elevated, the burden of energy subsidies and compensation\ncould increase and put pressure on budget deficits.<\/p>\n
\u201cApindo believes it is important for the government to manage this\nrisk carefully so as not to create excessive pressure on the deficit and\nstate debt financing,\u201d he stated firmly.<\/p>\n
Apindo also cautioned against potential rupiah volatility resulting\nfrom global risk-off dynamics. Weakening exchange rates will increase\nthe cost of energy and food imports, making coordination of monetary and\nfiscal policy crucial for maintaining macroeconomic stability.<\/p>\n
From a sectoral perspective, industries dependent on energy and\ninternational logistics will face direct pressure. Labour-intensive\nsectors are cited as most vulnerable due to thin margins and high\nsensitivity to distribution costs and imported raw materials.<\/p>\n
\u201cThe impact on the business sector itself will vary. Industries with\nhigh dependence on energy and international logistics will face direct\npressure. Labour-intensive sectors are among the most vulnerable because\nof thin margins and high sensitivity to distribution costs, imported raw\nmaterials, and disrupted export demand,\u201d he said.<\/p>\n
Although Indonesia\u2019s direct trade relations with Iran and Israel are\nrelatively limited, Sanny believes the indirect effects through global\nenergy prices, exchange rates, food inflation, and financial market\nsentiment are far more relevant to the national business community.<\/p>\n
In the short term, he said, business operators are focused on\nrealistic and adaptive risk mitigation steps.<\/p>\n
These include adjusting production and distribution cost structures,\nimproving operational efficiency, implementing more disciplined risk\nmanagement including foreign exchange exposure management, diversifying\nsupply sources, and utilising available hedging instruments or natural\nhedging.<\/p>\n
\u201cOverall, the business community is addressing this situation with a\nwait-and-see approach but preparing should global pressure continue,\u201d he\nconcluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/business-community-urges-government-action-as-iran-us-conflict-escalates-1772459921", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }