BI Rate Hike: Here Are the Outcries from Business Owners

The Indonesian Employers Association (Apindo) is warning of the impact of Bank Indonesia’s (BI) benchmark rate hike on the business world. Besides increasing borrowing costs, the rate hike is also feared to tighten access to financing and hamper business expansion, especially for small and medium enterprises. For context, Bank Indonesia, during its Board of Governors Meeting on 17-18 June 2026, decided to raise the BI Rate by 25 basis points to 5.75%. In less than a month, the central bank has raised its 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 Employment, Bob Azam, acknowledged that the BI Rate hike is indeed necessary. However, in his view, the move should have been implemented earlier so that the rupiah’s depreciation would not have gone too far. “The impact is that business becomes difficult. The BI rate will certainly increase interest rates and loans. Then it could also increase non-performing loans (NPLs), that is what we are worried about. But indeed, the BI rate should have been raised a long time ago,” Bob said when met at the Apindo National Executive Board office in Jakarta on Tuesday (23/6/2026). He assessed that the business world is now facing a double burden because the rupiah’s depreciation occurred before the interest rate adjustment was made. “This BI rate hike is a bit late. So our burden is doubled. The rupiah has already slipped, and interest rates are also rising,” he stated. According to Bob, the difference between Indonesia’s and the United States’ interest rates 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 too far. The interest rate in America is already 3.75%. It’s impossible for Indonesia to still be at 4%,” he said. Although he understands that the government and monetary authorities are trying to avoid overly drastic policies, Bob believes the delayed adjustment has only increased the pressure. “But now… we understand, the government avoids taking drastic steps. But when it is raised, the burden becomes twofold,” he mentioned. Bob then compared the situation to the energy subsidy policy, which he said is often held back for too long before eventually experiencing a large increase in a short period. “The rupiah has slipped, and so have interest rates. It’s the same with fuel subsidies. We appreciate the government holding back, but when it can no longer be held, it jumps 30%. Meanwhile, other countries do it gradually,” Bob said. He believes a gradual adjustment pattern would be better than holding a policy for too long until it eventually causes a shock for business actors. “But if we hold it and then release it with a 30% increase, that is what shocks the business world,” he stated. Furthermore, Bob said the impact of the rate hike will be felt more acutely by small business owners. Besides increased financing costs, access to working capital is also potentially more difficult because banks will be more cautious in disbursing credit. “We are certainly worried; working capital will also become more difficult. Banks will also be more selective. So expansion could also be disrupted,” he explained. According to him, this pressure is occurring amidst various other policies that are also adding to the burden on the business world. “Especially at the same time the government is intensifying taxation. It’s even heavier,” he said. Bob hopes the government will not burden business actors from multiple sides simultaneously, considering the business world’s important role in driving economic growth. “We hope for just one thing. If we make a BI rate adjustment, then don’t let the business world be attacked from many aspects. In fact, we need economic improvement through the growth of the business world, not solely from the government budget,” Bob said. He stressed that strong economic recovery can only be achieved if the business sector remains healthy and able to grow. “A healthier business world can lead to stronger economic improvement. Have pity. If possible, don’t let the burden be too great,” he said. On the other hand, Bob also highlighted tax policies, which he believes need to consider the current economic conditions more carefully. He assessed that fiscal relaxation could actually be a stimulus for economic growth. As an example, he mentioned Vietnam’s move to cut its Value Added Tax (VAT) rate to boost economic activity. “We are actually hoping for relaxation. It turns out, for example, Vietnam just relaxed its VAT from 10% to 8%, and the economy immediately grew,” he noted. Therefore, Bob hopes the government can find a middle ground between the need to maintain state revenue and the need to preserve the continuity of the business world. “So, if possible, let the government be safe and the business world be safe too. Saving the government by saving the business world. That is what we hope for,” he concluded.