Apindo: BI-Rate Policy Provides Certainty for Investment and Business

The Indonesian Employers’ Association (Apindo) stated that Bank Indonesia’s (BI) decision to maintain the benchmark interest rate (BI-Rate) at 5.75% represents an effort to balance macroeconomic stability with the sustainability of real sector growth. Apindo Chairwoman Shinta Widjaja Kamdani said BI’s move to hold the benchmark rate at 5.75% reflects that the 100 basis point rate hike since May 2026 still requires time for its transmission mechanism to fully work through the financial system and the economy. “We view Bank Indonesia’s decision to maintain the BI-Rate at 5.75% as a wise, measured step that reflects an effort to maintain a balance between macroeconomic stability and the sustainability of real sector growth,” Shinta stated on Wednesday (22/7/2026). The Bank Indonesia Board of Governors’ Meeting on 21-22 July 2026 decided to hold the BI-Rate at 5.75%, the Deposit Facility rate at 4.75%, and the Lending Facility rate at 6.5%. In the current situation, macroeconomic stability is a crucial prerequisite for the continuity of investment and business activity. The business community understands that maintaining rupiah stability is important to reduce imported inflation risk, ensure certainty over the cost of importing raw materials, capital goods, and energy, and preserve investor confidence in the national economy. However, businesses are also observing that pressure on the real sector remains significant. “Financing costs have increased following the monetary tightening of recent months, while businesses are also facing a global demand slowdown, high logistics costs, energy price volatility, and various high-cost economy components that have yet to be fully addressed,” Shinta explained. Shinta views BI’s approach, which increasingly emphasises a policy mix, as a positive development. In the current global conditions, maintaining exchange rate stability cannot rely solely on interest rate instruments. When pressure on the rupiah exchange rate stems more from external factors, an overly aggressive rate hike is not necessarily the most effective instrument. Therefore, BI’s move to combine interest rate policy with strengthening foreign exchange market instruments, deepening financial markets, managing liquidity, and various instruments to attract capital flows is the right policy direction. “This approach provides room to maintain stability without creating excessive tightening that could increase business financing costs,” she said. “However, that stability must also be balanced with the availability of financing that continues to support productive activity,” Shinta added. Furthermore, amid persistently high global uncertainty, the business community needs a monetary policy that is not only oriented towards stability but also capable of maintaining momentum in productive sectors. First, businesses consider it important that banking liquidity remains adequate so that the benchmark rate increase is not excessively passed through to working capital and investment loan rates. “Smooth financing transmission is an important factor so that companies still have room to expand and maintain their production activities,” she said. Second, incentives are needed to strengthen financing access for sectors with a high multiplier effect, such as manufacturing, labour-intensive sectors, MSMEs, and export-oriented industries. “Amid rising global capital costs, the sustainability of productive investment must be maintained,” she explained. Third, businesses support Bank Indonesia’s measures to deepen domestic financial markets, strengthen the foreign exchange market, and reduce hedging costs. “Exchange rate volatility is one of the main risks faced by the business community, so more efficient risk mitigation instruments will greatly help increase business certainty,” Shinta said. Fourth, coordination between monetary and fiscal policy must continue to be strengthened. In the current situation, the success of maintaining growth cannot rely on a single policy instrument. “Strong policy coordination is needed so that macroeconomic stability goes hand in hand with increased investment, productivity, and job creation,” Shinta concluded.