Amid Middle East Turmoil and US Tariffs, DBS Bank Highlights Golden Opportunity for Indonesia-China Relations Set to Explode!

Geopolitical tensions worldwide are intensifying once again, with relations between the United States-Israel and Iran heating up, sparking concerns over the stability of the Middle East region and global energy trade routes.

At the same time, US trade policy directions are back in the spotlight following the American government’s implementation of temporary global import tariffs that could reach around 15 per cent, adding uncertainty to international trade.

These conditions are driving trade and investment flows towards more stable and promising growth regions, positioning Asia as a prominent centre of the global economy.

In this context, Indonesia holds a strategic position with strong growth prospects and relatively maintained domestic stability.

Increasing regional connectivity is also strengthening Indonesia’s integration into regional trade and investment flows, including through economic partnerships with China, which is becoming an increasingly important pillar in regional supply chains and investments.

For Indonesian business actors, these developments are not merely bilateral trends but opportunities to expand markets and strengthen cross-border businesses.

“The Indonesia-China momentum is not just a trade opportunity but also reflects the transformation of an increasingly integrated regional business landscape,” said Anthonius Sehonamin, Director of Institutional Banking Group at PT Bank DBS Indonesia, in a written statement on Monday (20/4).

In facing these dynamics, he continued, comprehensive strategies are needed so that business actors can remain resilient while optimising available opportunities.

There are several strategy recommendations from the banking world, in this case Bank DBS, to help corporations, including companies involved in cross-border business activities with China, remain adaptive and capture opportunities amid global uncertainties, namely:

-Anticipate Geopolitical Risks with Market and Regional Supply Chain Diversification

Geopolitics is once again becoming one of the main factors influencing global economic dynamics in 2026.

Escalation of conflicts in various regions, including the Middle East, increases risks to international trade routes connecting Asia, Europe, and the Middle East region, and has the potential to disrupt global logistics flows and increase distribution costs.

This uncertainty drives market volatility while adding pressure to global supply chains.

In this context, the Asian region continues to show relatively strong growth prospects, with China as one of the main engines.

DBS Group Research projects China’s economy to grow around 4.5 per cent, supported by accommodative monetary policies, thus maintaining regional trade and investment activities.

For Indonesian corporations, this situation opens opportunities to balance global risks through market diversification and strengthening involvement in regional supply chains integrated with China as a global manufacturing hub.

Nevertheless, cross-border expansion also brings challenges, from regulatory changes and demand fluctuations to exchange rate volatility.

Therefore, corporations need to strengthen operational resilience through diversifying logistics routes, expanding partner networks, and implementing scenario planning and financial flexibility to remain adaptive to constantly changing global dynamics.

-Manage Exchange Rate Risks in Cross-Border Business

In the context of cross-border business, including Indonesia-China trade relations, DBS Group Research estimates USD/IDR to be around Rp 16,350 by the end of 2026, continuing the dollar strengthening trend that has been ongoing since 2025.

Although Bank Indonesia (BI) continues to intervene to maintain rupiah stability, external pressures still have the potential to trigger significant fluctuations.

Corporations with exposure to raw material imports, foreign currency debt, or cross-border projects are the most vulnerable to this risk.

In this context, exchange rate risk management is no longer optional.

Strategies such as hedging, natural hedging through cash flow matching, and adjusting financing structures based on revenue currencies become important steps to keep margins and cash flows healthy.

A disciplined approach will help corporations remain competitive without being eroded by foreign exchange market volatility.

-Build a Financial Structure Ready to Capture Long-Term Opportunities

Indonesia’s economic prospects are relatively strong, supported by increasing connectivity with China as a main trading partner, as well as projected growth of around 5.3 per cent and inflation maintained at around 2.8 per cent.

This provides room for corporations to expand.

On the other hand, China’s economy is expected to continue growing with low inflation around 0.5 per cent, and interest rates potentially at around 2.75 per cent.

This combination of stability in both countries creates a conducive environment for increased cross-border investments, trade financing, and long-term industrial collaborations.

Nevertheless, global dynamics such as capital flow volatility, exchange rate pressures, and geopolitical uncertainties remain risk factors that need to be anticipated.

Therefore, corporations need to ensure a healthy balance sheet structure, measured leverage levels, and diversified funding sources to remain flexible in making investment decisions.

With this preparedness, companies will not only be recipients of opportunities but active players in the continuously developing regional business ecosystem.

-Leverage Regional Supply Chain Shifts

Beyond portfolio and financial risk management strategies, geopolitical dynamics and global trade policies are also driving changes in supply chain structures.