Parliament Urges Government to Anticipate Steps for National Industry Amid Geopolitical Conflict
A member of Commission VII of Indonesia’s House of Representatives (DPR) from the Golkar Party faction, Gandung Pardiman, is urging the government to anticipate escalating geopolitical conflicts in the Middle East. The escalation between Iran, Israel and the United States has raised concerns about global economic stability, particularly in the energy sector, international logistics and the supply chain for domestic industrial raw materials.
He believes that conflict in the Middle East region could trigger volatility in global energy prices, disruptions to international trade routes, and increases in logistics costs and industrial raw materials. “This situation could ultimately affect the competitiveness of the manufacturing industry in various countries, including Indonesia. This is no trivial matter if the escalation continues to increase. The Strait of Hormuz is a vital route for global oil trade. Approximately one-fifth of global oil supplies pass through this route, so any disruption in that region could trigger a spike in international energy prices,” he said, as quoted from a press release received on Wednesday (11 March).
Rising global energy prices will have a direct impact on the manufacturing industry because most industrial sectors use energy as a major component of production costs. “Industries such as petrochemicals, basic metals, cement, fertiliser, and various other processing industry subsectors are very sensitive to energy price fluctuations,” said Gandung. The DPR, he continued, will soon consider strategic measures together with the government in addressing this matter.
“Given the developments in the global geopolitical situation, the performance of Indonesia’s manufacturing industry exports is certainly heavily influenced by global economic stability and international market demand,” concluded Gandung.
An energy expert from Padjadjaran University (Unpad), Yayan Satyakti, assessed that world oil prices still have the potential to surge to US$130 per barrel. Iran has stated it will not allow the United States, Israel or their allied nations to receive oil supplies from the Middle East region whilst the conflict continues. Canadian Prime Minister Mark Carney has called on the G7 to release strategic oil reserves to curb price increases due to Iran-related conflict and the closure of the Strait of Hormuz.