Parliamentarian Reveals Impact of Middle East War on Indonesia

Jakarta – The escalation of geopolitical conflict in Western Asia involving Iran, Israel and the United States presents a serious threat to global and Indonesian economic stability. Military tensions have triggered soaring crude oil and natural gas prices globally, creating uncertainty in the global energy supply chain.

Rising oil and gas prices will create various complications for the national economy. Disruptions will not only affect state fiscal capacity but will directly impact declining consumer purchasing power and increased production costs.

For the business sector that has not fully recovered from the pandemic, the current situation poses a significant challenge. Pulung Agustanto, a member of Commission IX of the House of Representatives, expressed concern that the heavy burden on business could lead to reduced working hours, production constraints and redundancies.

“The business sector’s dependence on energy supplies, particularly oil and gas, is extremely high. If commodity prices increase sharply, it could have serious consequences. I am concerned about a wave of redundancies in Indonesia,” Pulung stated in a written statement on Monday, 9 March 2026.

Pulung cited neighbouring Philippines as an example, which has already implemented policy changes to reduce working hours to four days per week in government offices.

“They are making rapid adjustments in response to global oil price increases,” Pulung noted.

According to Pulung’s analysis, the risk of redundancies could affect labour-intensive sectors such as textiles, footwear, electronics and manufacturing, which are highly sensitive to changes in production costs and global market demand.

In addition, rising energy costs have the potential to drive domestic inflation. When energy and transportation prices increase, consumer purchasing power tends to decline.

“This reduction in purchasing power can impact decreased demand for industrial products, ultimately intensifying pressure on the business sector,” he said.

This situation could create a cascading effect throughout the national economy: rising energy costs increase production expenses, elevated production costs compress company profits, declining profits necessitate efficiency measures, and efficiency initiatives result in workforce reductions.

“The government must urgently prepare economic mitigation strategies to prevent a wave of redundancies in Indonesia,” he concluded.