BI Rate Hike: Here Are the Outcries from Business Owners

Jakarta, CNBC Indonesia - The Indonesian Employers Association (Apindo) has issued a warning regarding the impact of Bank Indonesia’s (BI) benchmark interest rate hike on the business sector. In addition to increasing borrowing costs, the rate hike is feared to tighten access to financing and hinder business expansion, particularly for small and medium-sized enterprises.

As information, during the Board of Governors Meeting on 17-18 June 2026, Bank Indonesia decided to raise the BI Rate by 25 basis points to 5.75%. In less than a month, the central bank has raised the benchmark rate three times, with a total increase of 100 basis points, as a measure to maintain Rupiah stability and control inflation.

Apindo’s Head of Manpower, Bob Azam, acknowledged that the BI Rate hike is indeed necessary. However, he believes the move should have been implemented earlier to prevent the Rupiah’s depreciation from becoming too severe.

“The impact is that (business) becomes difficult. The BI rate will certainly increase interest rates on loans. Furthermore, it could increase NPLs (non-performing loans); that is our concern. But the BI rate should have been raised a long time ago,” said Bob when met at the Apindo national office in Jakarta on Tuesday (23/6/2026).

He assessed that the business world is currently facing a double burden because the Rupiah’s weakness occurred before the interest rate adjustment was made.

“It is a bit late (the BI rate hike). So our burden is doubled. The Rupiah has already slipped, and now interest rates are rising too,” he said.

According to Bob, the interest rate differential between Indonesia and the United States (US) should have been a consideration for BI to make adjustments more quickly.

“The BI rate should have been adjusted some time ago, so the Rupiah wouldn’t have slipped so far. US interest rates are at 3.75%, so it is impossible for Indonesia to remain at 4%,” he remarked.

While understanding that the government and monetary authorities are attempting to avoid overly drastic policies, Bob believes the delayed adjustment is actually increasing the pressure on the business sector.

“But now… well, we understand that the government is trying to avoid taking drastic steps. However, once it is raised, the burden becomes doubled,” he noted.

Bob then compared this condition to energy subsidy policies, which he believes are often held for too long before eventually experiencing a large increase in a short period.

“The Rupiah has slipped, and so have interest rates. It is just like fuel subsidies. We appreciate the government holding it back, but when it can no longer be held, it jumps by 30% immediately. Whereas in other countries, it is done gradually,” said Bob.

He assessed that a pattern of gradual adjustment would be better than holding onto policies for too long, which ultimately causes shocks to businesses.

“If we hold it and then release it with a 30% increase, that is what shocks the business world,” he said.

Furthermore, Bob stated that the impact of the interest rate hike will be felt most acutely by small businesses. Besides rising financing costs, access to working capital could become increasingly difficult as banks become more cautious in disbursing credit.

“We are certainly worried; working capital will become even more difficult. Banks will also be more selective, so expansion could be disrupted,” he explained.

He noted that this pressure is occurring at a time when other policies are also adding to the business burden.

“Especially since at the same time, the government is intensifying taxation. It is getting even heavier,” he said.

Bob hopes the government will not burden businesses from multiple sides simultaneously, considering the vital role the business sector plays in driving economic growth.

“We hope it is just one thing; if we implement an interest rate adjustment, let it be that. Do not let the business world be attacked from so many aspects. We need economic improvement through the growth of the business sector, not solely through government budgets,” said Bob.

He emphasised that a strong economic recovery can only be achieved if the business sector remains healthy and capable of growing.

“A healthier business sector can lead to a stronger economic improvement. It would be a pity if the burden becomes too great,” he added.

On the other hand, Bob also highlighted taxation policies, which he believes need to more carefully consider current economic conditions. He assessed that fiscal relaxation could serve as a stimulus for economic growth.

As an example, he mentioned Vietnam’s move to cut Value Added Tax (VAT) rates to encourage economic activity.

“This is actually what we hope for in terms of relaxation. For instance, Vietnam recently relaxed VAT from 10% to 8%, and their economy grew immediately,” he said.

Therefore, Bob hopes the government can find a middle ground between the need to maintain state revenue and ensuring the sustainability of the business sector.

“So, if possible, the government survives, and the business world survives as well. Saving the government by saving the business world. That is what we hope for,” he concluded.