This Week in Indonesian Business and Investment (13-19 Mar 2026)

The week of 13 to 19 March 2026 will long be remembered as one of the most turbulent in recent Indonesian business history, defined by the death of a billionaire patriarch, a rupiah under siege, a stock market enduring its worst Ramadan performance in a decade, and a global energy crisis that forced Jakarta to make some of its most consequential fiscal choices in years.

The passing of Michael Bambang Hartono on Thursday afternoon in Singapore, confirmed at 13:15 local time at the age of 86, cast a long shadow over the week. Alongside his brother Robert Budi Hartono, Bambang had transformed a modest kretek cigarette factory in Kudus – rebuilt after a devastating fire in 1963 – into one of the most diversified conglomerates in Southeast Asia. The Djarum Group’s holding company, PT Dwimuria Investama Andalan, controls a majority stake in Bank Central Asia, which reported a net profit of Rp31.64 trillion in 2025. Beyond tobacco and banking, the empire sprawls across electronics via Polytron, e-commerce through Blibli, property including Grand Indonesia Mall, telecommunications towers through TOWR, and early-stage investments in companies like Gojek and tiket.com. His personal fortune was estimated variously between US$17.5 billion and US$22.2 billion by different sources. Tributes poured in as news spread, with commentators noting that Hartono embodied a particular strain of Indonesian entrepreneurial humility – a man of vast wealth who was often photographed eating tahu pong at a Semarang street stall. His body was flown to Jakarta for a lying-in-state at Grand Heaven funeral home from 20 to 22 March, before being taken to Kudus and ultimately buried on 25 March at the family plot in Godo, Rembang Regency, Central Java. The question of succession and what happens to the Hartono family’s crown jewel – its controlling stake in BCA – will preoccupy analysts in the months ahead.

The macro backdrop against which Hartono’s passing occurred was extraordinarily tense. The conflict between the United States, Israel, and Iran, which erupted on 28 February with strikes that killed Iranian Supreme Leader Ali Khamenei, had by mid-March effectively closed the Strait of Hormuz to regular commercial shipping. Brent crude climbed above US$100 per barrel, with some sessions seeing it breach US$107. Indonesia found itself acutely exposed: two Pertamina tankers, Pertamina Pride and Gamsunoro, were detained in the strait, and the Foreign Ministry was forced to engage Iranian authorities directly to secure their release. Over 1.67 million tonnes of crude oil destined for India were reported stranded on 22 vessels. Iran was simultaneously circulating a bill that would require transit fees for ships using the waterway, and was reportedly considering allowing only tankers transacting in Chinese yuan to pass – a remarkable geopolitical signal.

For Indonesia, the immediate fiscal arithmetic was alarming. The government’s 2026 budget had assumed an oil price of US$70 per barrel. With prices spiking to between US$91 and US$107 across the week, economists at LPEM UI warned the budget deficit could breach the statutory 3 per cent of GDP ceiling. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, convened a restricted ministerial meeting and presented three deficit scenarios to President Prabowo Subianto ranging from 3.18 to 4.06 per cent, floating the idea of a Government Regulation in Lieu of Law (Perppu) to provide legislative flexibility. President Prabowo was unequivocal in response: the 3 per cent ceiling would hold, except in circumstances comparable to the Covid-19 pandemic. Finance Minister Purbaya Yudhi Sadewa backed the president’s line, announcing that subsidised fuel prices would not rise – at least through Eid – and that the state budget retained sufficient fiscal space to act as a shock absorber. He also disclosed that the government was pursuing ten companies suspected of underinvoicing on imports, a move expected to bolster revenue as February tax receipts had already grown 30.4 per cent year-on-year. Budget efficiency measures were ordered across all ministries and agencies, with overseas travel, non-urgent equipment purchases, and supplementary programmes placed under review. Ministerial salary cuts were also on the table.

Bank Indonesia, meanwhile, confronted the rupiah’s deterioration with a combination of restraint and resolve. Governor Perry Warjiyo announced at the 16-17 March Monetary Policy Committee meeting that the BI-Rate would remain at 4.75 per cent for a sixth consecutive month – crucially, the central bank also dropped its forward guidance on future rate cuts, a signal interpreted by markets as an extended pause in the easing cycle that began in September 2024. The rupiah had weakened 1.29 per cent month-to-date to around Rp16,975-16,997 per US dollar, with net portfolio outflows of US$1.1 billion recorded in March. Foreign exchange reserves, at US$151.9 billion as of end-February, covering more than six months of imports, provided meaningful ballast. Senior Deputy Governor Destry Damayanti confirmed that Bank Indonesia would monitor offshore Non-Deliverable Forward markets around the clock during the extended Nyepi and Eid holiday closure, with BI New York on standby to intervene if necessary. The central bank also tightened rules on cash foreign exchange purchases, halving the monthly limit to US$50,000 per participant from April, and raised thresholds for derivative transactions to improve market liquidity and dampen speculation.

The Jakarta Composite Index closed the final trading session before the Eid recess on 17 March at 7,106.84, up 1.2 per cent on the day but still nursing a loss of roughly 15 per cent since the beginning of Ramadan on 19 February – the worst Ramadan performance in over a decade. Foreign investors had been net sellers throughout most of the period, with Bank Central Asia (BBCA) among the primary targets on 16 March as geopolitical anxiety drove risk-off sentiment. Even so, pockets of resilience emerged: three Indonesian gold mining companies – PT Merdeka Gold Resources, PT Archi Indonesia, and PT J Resources Asia Pasifik – were added to the MVIS Global Junior Gold Miners Index effective 20 March, triggering notable foreign inflows. PT Alamtri Resources Indonesia, led by Garibaldi “Boy” Thohir, announced a share buyback programme of up to Rp4 trillion, and PT Merdeka Battery Materials announced a buyback of up to 1.8 billion shares. Fitch had downgraded Indonesia’s sovereign debt outlook to negative earlier in the period, citing governance concerns around Danantara and fiscal risks, adding to the broader pressure.

Amid the turbulence, several structural developments pointed to Indonesia’s longer-term investment momentum. The Gresik Special Economic Zone cemented its position as the country’s premier industrial estate, having absorbed Rp106.3 trillion in investment between 2021 and 2025 – approximately 30 per cent of the national SEZ total of Rp336 trillion. The zone’s social impact was equally notable, with unemployment in the region falling from 8 per cent to 5.47 per cent and the Human Development Index rising from 77.30 to 79.69. AKR Corporindo, which operates the Java Integrated Industrial Port Estate (JIIPE) within the Gresik ecosystem, reported an 11 per cent rise in net profit to Rp2.47 trillion in 2025, with land sales surging 107 per cent. In Nusantara, the new capital authority signed cooperation agreements worth Rp1.275 trillion with three new investors for residential, retail, and culinary developments. The Indonesia-US bilateral trade relationship remained a live and contested topic: Coordinating Minister Airlangga confirmed that zero tariffs on 1,819 Indonesian commodities under the Agreement on Reciprocal Trade remained in force even as the US Trade Representative launched a Section 301 investigation into 16 countries, including Indonesia, over alleged excess manufacturing capacity and forced labour concerns. Jakarta was preparing its legal and evidential response while the government reaffirmed its commitment to the agreement, even as Malaysia became the first country to void its own equivalent pact following a US Supreme Court ruling.

On the digital finance front, Mastercard’s announcement of its US$1.8 billion acquisition of stablecoin infrastructure firm BVNK signalled the accelerating convergence of traditional and blockchain-based payments. Domestically, GoPay expanded its cardless cash withdrawal service to BRI and Bank BJB ATM networks ahead of the 143.9 million-traveller Eid exodus, while Bank Indonesia confirmed that Japanese tourists would soon be able to use their home QR payment codes at Indonesian merchants, completing a bilateral QRIS linkage that had previously operated only in one direction.

Looking ahead, the trajectory of global oil prices and the pace of de-escalation in the Middle East will be the dominant variables for Indonesia’s economic management in the near term. Bank Indonesia has made clear that rate cuts are off the agenda until external pressures recede; fiscal managers must walk the tightrope between protecting priority programmes – the Free Nutritious Meals initiative and village cooperatives were both explicitly ring-fenced from budget cuts – and maintaining credibility with ratings agencies already watching with scepticism. The return of markets on 25 March will provide the first live test of investor sentiment after the Eid recess, with MSCI discussions on free float methodology, FTSE Russell decisions, and the implementation timeline for short selling all due in the weeks that follow. For all the noise of the moment, Indonesia enters the post-Eid period with foreign exchange reserves intact, a banking sector reporting a capital adequacy ratio of 25.87 per cent, and an industrial investment story in its special economic zones that continues to outperform. Whether that bedrock holds depends substantially on events unfolding far beyond Jakarta’s control.