Rupiah Breaches 17,500 Level, Business Owners: Company Cash Flows Increasingly Pressured

JAKARTA, KOMPAS.com - The Indonesian Employers Association (Apindo) states that the rupiah’s weakening to Rp 17,500 per US dollar is increasingly pressuring the cost structures and cash flows of domestic companies.

Apindo General Chairperson Shinta Kamdani said the exchange rate depreciation directly drives up import costs.

The national industry’s operations currently remain heavily reliant on raw materials sourced from abroad.

“Currently, around 70 percent of manufacturing raw materials come from imports, with raw materials contributing about 55 percent to the production cost structure,” Shinta said when contacted by Kompas.com on Tuesday (12/5/2026).

According to Shinta, the exchange rate weakening impacts the burden of importing raw materials quickly, although the final price effects vary by sector.

Among various domestic industries, the petrochemical, plastics, pharmaceutical, food and beverage, and energy-based manufacturing sectors have high dependence on imported raw materials.

This makes those sectors the most vulnerable.

Shinta gave an example: the rise in the price of the main plastic raw material, naphtha, significantly increases resin prices.

That situation triggers a chain effect in the packaging industry and other downstream sectors.

“Cost-push inflation pressure that is not limited to one sector but has broad transmission effects across the entire supply chain,” Shinta stated.

Not only that, companies’ finances are also feeling the negative impact of the exchange rate weakening.

The strengthening of the US dollar against the rupiah increases the burden of principal and interest payments on corporate debt in foreign currencies (Valas).

That condition results in increased cash flows and company risks.

Meanwhile, companies are not free to raise product selling prices due to consumer purchasing power that has not yet recovered.