Batam Entrepreneurs Alarmed by Dollar Threatening to Hit Rp18,000
Batam’s business community is growing wary of the rupiah’s depreciation against the US dollar, with some warning that the rate could breach Rp18,000. Such a development is seen as placing substantial pressure on businesses, particularly industries that still rely on imported raw materials and the logistics sector.
Rafki Rasyid, chairman of APINDO Batam, said the rupiah’s weakness does indeed benefit exporters, but for industries that import raw materials and sell mainly in the domestic market, the stronger trend is a heavy burden because production costs rise automatically. “If you are an exporting company there is a currency gain from the exchange rate. But for industries whose raw materials are imported and whose primary market is domestic, this is a serious pressure as production costs rise,” he told Media Indonesia on Tuesday (19/5).
He said the current pressure on business comes not only from the rupiah’s weakness but also from higher prices for non-subsidised fuel and aviation turbine fuel (avtur), which directly affect logistics and distribution costs. He warned energy cost increases are almost certain to push up the prices of essential goods for the public, with raw-material costs such as plastics and various industrial components rising as well.
“Logistics costs rise, raw-material prices rise, and eventually consumer prices follow,” he said.
Similar concerns were voiced by those in the logistics sector. Amir, director of a container trucking company, said logistics is one of the sectors quickest to feel the impact of the dollar’s rise and energy prices. “Logistics operations depend heavily on fuel and vehicle spare parts, most of which are still imported. If the dollar keeps rising, operating costs will automatically go up,” he said. He added that higher logistics costs will ultimately affect prices for goods at the consumer level as distribution costs rise.
He also noted that the unsettled global economy makes businesspeople more cautious about decision-making, especially regarding expansion and adding fleet capacity. “If the global situation does not improve and the exchange rate remains under pressure, businesses will be more prudent. Everyone is focusing on efficiency now.”
Beyond currency and energy pressures, Batam’s business community faces global uncertainty from geopolitical conflicts across regions, high energy prices, and disruption to international supply chains. Shortages of certain industrial commodities such as electronic chips and plastic pellets are also seen as increasing manufacturing costs.
Rafki warned that if the rupiah’s weakness persists and the Rp18,000 scenario materialises, the consequences could widen for businesses and consumer purchasing power. Business circles therefore call on the government to take strategic steps to maintain national economic stability and bolster domestic industry resilience. He also noted that in such a situation, the central bank should not only manage inflation but also uphold confidence in overall policy direction. He explained that interventions would be conducted not only in the domestic market but also in overseas markets, with a move that affected foreign exchange reserves by around US$10 billion. The rupiah has since weakened again, briefly breaching the Rp17,600 per US dollar level before closing around Rp17,476 per dollar.”