Kadin Emphasises Caution in Responding to Energy Commodity Price Dynamics

Jakarta (ANTARA) - The Indonesian Chamber of Commerce and Industry (Kadin) emphasises the principle of prudence in responding to the dynamics of global energy commodity prices, which affect industrial raw materials, production, and distribution to the public.

“Business actors are responding with full prudence by considering the purchasing power of the public,” said Vice Chairman of Kadin for Regional Autonomy, Sarman Simanjorang, when contacted in Jakarta on Tuesday.

Sarman stated that surges in energy commodity prices, such as fuel oil (BBM) and gas, influence production and distribution costs.

This, he continued, is because many industries still rely on imported raw materials, so increases in BBM prices affect logistics and transportation costs.

“Business actors will automatically adjust production prices due to rises in logistics/transportation and raw material costs, with the increase in production costs leading to higher prices at the consumer level,” said Sarman.

“By considering the current global public purchasing power conditions, business actors are still trying to maintain old prices through efficiencies and margins. However, if it persists, business actors will not be able to sustain it and will eventually raise product prices at the consumer level,” he added.

Therefore, Kadin views that important mitigations include innovation, reducing production costs so that increases at the consumer level do not rise, and considering reductions in product volume/size to maintain prices, thus not affecting public purchasing power.

In addition, he considers it important for the government to ensure the good availability of domestic BBM and gas, thereby ensuring no price increases, maintaining rupiah exchange rate stability, and preserving public purchasing power through various strategic programmes.

“The government must be able to maintain market and public psychology in responding to the impacts of geopolitics full of uncertainties, so that our economy in various sectors remains productive,” said Sarman.