Ministry of Industry: Middle East Conflict Has Limited Impact on Agro Sector Performance
Jakarta (ANTARA) — Indonesia’s Ministry of Industry (Kemenperin) has affirmed that the conflict occurring in the Middle East region is not significantly impacting the performance of the nation’s agro-industrial sector.
This is because the majority of raw materials for the sector originate from within the country or from other nations outside the conflict zone, according to Putu Juli Ardika, Acting Director General of Agro-Industry at Kemenperin, during a meeting in Jakarta on Tuesday.
According to him, Indonesia’s agro-industry possesses sufficient resilience against global geopolitical disruptions owing to its reliance on domestic resources.
“Agro-industry is the processing of our natural resources. Therefore, for primary raw materials, there are no issues directly related to the conflict in the Middle East,” said Putu.
He stated that most raw materials for the agro-industry, such as cooking oil, processed food products, and various agriculture-based commodities, are supplied from within the country. Consequently, the Middle East conflict does not directly disrupt the availability of raw materials for the industry.
Furthermore, the need to import raw materials for the agro-industry generally does not originate from Middle Eastern countries. For example, industrial sugar such as refined sugar is predominantly imported from countries such as Australia, Thailand, and the Latin American region.
As for other imported raw materials, these have already entered the country prior to the conflict.
Nevertheless, Putu acknowledged that global geopolitical conflicts retain the potential to cause indirect impacts, particularly regarding distribution costs.
“The impact is more related to transportation or logistics costs,” he said.
He stated that the ministry continues to monitor global developments in order to anticipate potential supply chain disruptions or changes in logistics costs resulting from geopolitical dynamics.
“We have also prepared alternatives so that the impact on the agro-industry is not significant,” Putu said.
Meanwhile, Minister of Industry Agus Gumiwang Kartasasmita stated that the Middle East conflict has the potential to trigger volatility in global energy prices, disrupt international trade routes, and increase logistics costs and industrial raw material prices.
“We continue to monitor developments of the conflict in the Middle East because the region is one of the world’s energy centres and an extremely important global logistics route. Every escalation of the conflict certainly has the potential to affect energy prices, the smooth flow of industrial raw material supply chains, and logistics costs used by the manufacturing sector,” said the Minister in a statement confirmed in Jakarta on Thursday (5 March).
According to him, one of the most influential factors affecting the industrial sector is the potential disruption to global energy distribution, given the closure of the Strait of Hormuz, which is a vital route for global oil trade, with approximately one-fifth of global oil supply passing through this route.