Indonesia's Trade Minister: Exports to Middle East proceeding normally despite rising freight costs

Jakarta – Indonesia’s Trade Minister Budi Santoso stated that Indonesian export activities to the Middle East region continue to operate normally despite facing challenges from rising freight costs.

Budi said the information was obtained from business operators affiliated with the Indonesian Export Companies Association (GPEI).

“Yes, they (exporters) have conveyed that there are indeed several influences, particularly for exports to the Middle East,” Budi said following a coordination meeting at the Ministry of Coordinating Affairs for Food in Jakarta on Friday.

He explained that in general, demand for Indonesian commodities from Middle Eastern countries remains relatively stable. However, the primary challenge faced by exporters currently is the increase in logistics or transportation costs.

“Demand from the Middle East is not actually declining. What is rising is the transportation cost,” he said.

Despite facing higher transportation costs, Budi stated that Indonesian exporters continue their export activities to the region. He expressed hope that global logistics conditions will improve soon so that trade activities can proceed more smoothly.

The Central Statistics Agency (BPS) previously stated that the conflict in the Middle East region could potentially affect global trade activities, although its impact on Indonesian trade is assessed as relatively minor.

BPS noted that the value of Indonesian exports to the Middle East region reached approximately 9.06 billion US dollars, or approximately 3.5 per cent of total national exports.

The main destination countries for Indonesian exports in the region include the United Arab Emirates, Saudi Arabia and Oman.

Commodities exported by Indonesia to the Middle East region include palm oil and its derivatives, vehicles and their parts, precious metals, and various chemical products.

Previously, tensions in the Middle East region have increased recently following a conflict involving the United States and Israel with Iran. This conflict has triggered concerns about the smooth flow of international trade routes in the region.

One strategic route of concern is the Strait of Hormuz, which is the main shipping route for oil and various commodities from the Gulf region to global markets. Disruptions to this route could potentially affect logistics costs and international trade distribution.