Rupiah Plunge: Apindo Says Pressure on Business World No Longer Temporary

The Indonesian Employers’ Association (Apindo) assesses that the weakening of the rupiah exchange rate, which has breached the level of Rp17,500 per US dollar, is placing substantial pressure on the business world. The greatest pressure is felt by the manufacturing sector, which still depends on imported raw materials. Apindo General Chairman Shinta Widjaja Kamdani stated that the pressure on the rupiah is influenced by global dynamics. According to her, the rise in US Treasury yields due to US fiscal financing needs, as well as the escalation of geopolitical conflicts, is driving global capital flows back to dollar-based assets. “The pressure occurring is not temporary in nature but has the potential to continue as long as global factors have not subsided,” said Shinta on Wednesday (13/5/2026). The rupiah’s weakening increases the cost of importing raw materials. Yet, around 70 percent of national manufacturing raw materials still come from imports. Apindo notes that the contribution of raw materials accounts for about 55 percent of the industrial production cost structure. This condition means that every rupiah depreciation is directly reflected in rising production input costs. Shinta said the most vulnerable sectors affected are those with high import dependency. Some of these include petrochemicals, plastics, food and beverages, pharmaceuticals, and energy-based manufacturing. She cited the rise in naphtha prices as the main raw material for the plastics industry, which has driven resin prices up by tens of percent. This condition then triggers a chain effect to the packaging industry and other downstream sectors. “This shows the presence of cost-push inflation pressure that has a broad transmission effect to the entire supply chain,” she said. Pressure also arises from interest and principal debt payments. This condition affects cash flow management and increases company risk profiles. Consumer purchasing power, which has not fully recovered, also limits business actors’ room to raise selling prices. As a result, part of the cost increase must be borne by companies, thus pressuring business margins.