Power Cuts Cause Industrial Performance to Slump
The Ministry of Industry reported that the Industrial Confidence Index (IKI) fell by 0.60 points month-on-month to 52.90 in June 2026. This value is lower than the industrial confidence level of 53.6 recorded in May. “In June, the challenges for industry were not only production but also demand,” said Ministry of Industry spokesperson Febri Hendri Antoni Arief during an online press release on Tuesday, 30 June 2026. Febri explained that challenges for the sector in the sixth month extended beyond rising global energy prices and the weakening rupiah exchange rate, which have caused raw material costs to soar. He added that industrial challenges increased due to power cuts during the month. This condition caused industries and industrial estates that rely on electricity for production to halt their operations during the blackouts. Besides power cuts, the industry faced challenges from rising gas prices, particularly those originating from LNG regasification. However, Febri stated that the Ministry of Industry appreciates the efforts of the House of Representatives and the government to lower the regasified LNG price to US$13 per MMBTU. He said the price reduction is a breath of fresh air for industry, especially for those using gas as a raw material or included in the HGBT programme. Beyond supply-side challenges, Febri noted that businesses are experiencing demand-side challenges. He stated that demand was still quite high in May and inflation remained under control, thus maintaining public purchasing power, especially for manufactured goods. However, in June, the Ministry of Industry observed an increase in household consumer goods prices. The rise in non-subsidised fuel prices, Febri said, has also eroded public purchasing power. The Ministry is observing that spending by consumers of non-subsidised fuel is decreasing, particularly for manufactured products. Despite all the challenges, Febri stated that the industry remains resilient, mainly supported by considerable domestic demand. The Ministry of Industry estimates that purchasing power will be maintained. Furthermore, government spending, especially on priority programmes such as free nutritious meals, village cooperatives, the implementation of B50, and fishing villages, will increase demand for manufactured products. “In our view, this is one of the pillars supporting the increase in domestic demand,” he said. Based on the components forming the June 2026 IKI, 22 sub-sectors expanded and one contracted. The expanding sub-sectors contributed 98.6 per cent to the total non-oil and gas manufacturing gross domestic product in the first quarter. The highest performing sub-sectors were beverages and apparel. Meanwhile, the sub-sector that contracted was leather, leather goods, and footwear. Based on variable values, new orders slowed by 0.12 points to 53.5. The production variable also fell by 0.92 points in June 2026, as did the product inventory variable, which dropped by 1.61 points and entered the contraction zone. Based on market orientation, the Ministry of Industry recorded that the performance of domestically oriented industries decreased by 2.30 points to 51.16. Meanwhile, export-oriented industries experienced growth of 0.33 points to 54.06. Febri said the increase in export performance was influenced by export destination countries experiencing positive growth.