Construction Businesses Groan as Diesel Prices Rise and Rupiah Weakens

Global economic and geopolitical turmoil, which has triggered a depreciation of the rupiah and a rise in energy prices, is now impacting Indonesia’s construction sector. The weakening rupiah and the increase in diesel prices have caused production costs to surge, with material prices climbing by 8 to 15 per cent and placing a heavy burden on business operations. The Indonesian National Construction Implementers Association (Gapensi) is hoping for government support to maintain project stability, accompanied by regulatory flexibility deemed essential for business continuity. One proposed measure is an adjustment to the contract value for ongoing projects affected by the diesel price hike. On a separate note, Gapensi expressed appreciation for the government’s efforts to encourage the private sector to play a greater role in infrastructure projects, which are increasingly spread across various regions in Indonesia.