Rupiah Weakness Increases Manufacturing Industry Production Costs

Apindo Chair Shinta Widjaja Kamdani acknowledges that the weakening rupiah is increasing production costs in the manufacturing industry sector. Shinta is concerned that this pressure is not temporary but could continue for a long time. “The pressure occurring is not temporary but has the potential to persist as long as global factors have not subsided,” Shinta stated, quoted from Kontan, Wednesday (13/5/2026). The rupiah’s weakening increases production costs; Apindo notes that 70% of raw materials are still imported. Furthermore, 55% of the manufacturing industry’s production cost structure comes from raw materials. This situation creates dependency on the rupiah exchange rate, with depreciation of the currency impacting the determination of final selling prices of products. “This shows cost-push inflation pressure that has a broad transmission effect to the entire supply chain,” she explained. Additionally, the rupiah’s weakening forces companies to increase payments to foreign importers using the US dollar. Another side effect is that companies cannot expand, resulting in reduced job absorption. “Investments that are more speculative or highly dependent on external conditions tend to be postponed,” Shinta explained. To mitigate rising prices, companies are beginning to diversify suppliers and substitute imports. “BI estimates that this seasonal pressure will subside, allowing the rupiah exchange rate to return to its fundamental level,” she stated, quoted from Kompas.com, Tuesday (12/5/2026).