This Week in Indonesian Business and Investment (20-26 Mar 2026)

The week of 20–26 March 2026 proved to be one of the most consequential in recent Indonesian economic memory, as the country navigated the twin pressures of a deepening Middle East crisis and a post-Lebaran market reawakening. With the Indonesia Stock Exchange reopening after the extended Nyepi and Eid al-Fitr holiday, investors, policymakers, and business leaders were forced to reconcile festive optimism with a volatile global backdrop shaped by the ongoing US-Israel-Iran conflict and its cascading effects on energy markets, supply chains, and currency stability.

The Middle East Shadow

The dominant story of the week was, without question, the Strait of Hormuz crisis. Since the US and Israeli strikes on Iran on 28 February 2026, approximately 1,900 commercial vessels remained stranded in the strait and the Persian Gulf, including two Pertamina tankers detained in the Arabian Gulf. Iran’s parliament moved to legislate permanent transit fees of US$2 million per tanker, while selectively allowing passage to ships from friendly nations such as Russia, China, India, Pakistan, and Iraq. Malaysian Prime Minister Anwar Ibrahim secured safe passage for Malaysian vessels through direct diplomacy with Iranian President Masoud Pezeshkian – a notable diplomatic achievement that underscored Jakarta’s comparative disadvantage: Indonesia’s own vessels remained detained, with the Foreign Ministry still working to secure their release.

The geopolitical fallout reverberated through Indonesia’s financial markets with immediate force. The Jakarta Composite Index (JCI) closed Thursday, 26 March, down 1.89 per cent to 7,164.09, dragged lower by energy sector losses of 2.91 per cent and heightened risk-off sentiment as foreign investors net-sold more than Rp 20 trillion during the session. Bank Central Asia (BBCA) bore the brunt of the foreign sell-off in the regular market. The rupiah, however, showed surprising resilience, closing slightly stronger at around Rp 16,904 per US dollar, buoyed by cautious optimism over Iran’s reported review of a US-backed 15-point peace proposal. Earlier in the week, on 25 March, the JCI had surged 2.75 per cent to 7,302 upon reopening, driven by falling oil prices, positive Asian market sentiment, and domestic fiscal discipline signals – only to give back a significant portion of those gains the following day as Iran rejected a ceasefire offer and tensions reignited.

The broader economic consequences for Indonesia were substantial. The Financial Services Authority (OJK) acknowledged that credit demand – particularly in export and import-linked sectors – faced disruption, while analysts warned that sustained high oil prices could push the state budget deficit beyond the 3 per cent GDP threshold, potentially requiring an additional Rp 126 trillion in energy subsidies. Finance Minister Purbaya Yudhi Sadewa responded proactively, injecting an additional Rp 100 trillion from the Excess Budget Balance (SAL) into state-owned banks, bringing the total government placement to approximately Rp 300 trillion. OJK confirmed this would ease liquidity pressures, reduce special deposit rates, and allow banks to better align lending rates with Bank Indonesia’s 4.75 per cent benchmark. Economists from CORE and Indef cautioned, however, that the injection would only stimulate the real economy if accompanied by direct fiscal measures such as targeted social assistance.

Banking Sector: Stability and Aspiration

Despite the turbulence, Indonesia’s banking sector offered several reassuring signals this week. OJK indicated that two to three banks currently classified under KBMI III were poised to upgrade to KBMI IV status – requiring core capital above Rp 70 trillion – joining the existing four: BRI, Bank Mandiri, BNI, and BCA. While Bank Syariah Indonesia (BSI) aims for KBMI IV status in the medium term, the institution reported a strong 17 per cent year-on-year rise in unaudited net profit to Rp 1.36 trillion for February 2026, with its gold banking services surging 136.55 per cent to Rp 463 billion in fee-based income. BSI also disbursed Rp 1.65 trillion in KUR financing and contributed to the government’s MBG nutritious meals programme. Separately, PT Bank Syariah Nasional (BSN), the spin-off from Bank Tabungan Negara’s sharia unit, received a strong idAA+ credit rating with a stable outlook from Pefindo, reinforcing confidence in the sharia banking consolidation agenda OJK has been advancing.

The leadership landscape of Indonesia’s capital markets also attracted attention. KPEI chief executive Iding Pardi confirmed his candidacy for the BEI chief executive role for the 2026-2030 term, with an Extraordinary General Meeting of Shareholders scheduled for June 2026. The Indonesian Issuers’ Association took a neutral stance, noting the merits of both internal and external candidates, while OJK’s capital market supervision head Hasan Fawzi confirmed that no formal submissions had yet been received ahead of the 4 May deadline.

Corporate Highlights: Petrochemicals, Infrastructure, and Downstreaming

Among the week’s standout corporate stories, PT Chandra Asri Pacific Tbk (TPIA) reported a dramatic financial turnaround, posting a net profit attributable to parent company shareholders of US$1.09 billion for the full year 2025 – a sharp reversal from a loss of US$68.6 million the previous year. Total revenue surged to US$7.02 billion, and total assets expanded to US$12.3 billion, with the group eyeing record operational profits in the first quarter of 2026. Its subsidiary PT Chandra Daya Investasi Tbk (CDIA) also posted impressive results, with net profit rising 285 per cent to US$121 million in its first full year as a public company, driven by electricity sales, ship leasing, and logistics.

On the infrastructure and downstreaming front, PT Perkebunan Nusantara IV PalmCo announced plans to break ground shortly after Eid on an integrated palm oil processing facility in the Sei Mangkei Special Economic Zone in North Sumatra. Aligned with national hilirisation directives from the Danantara investment agency, the project would shift the company from crude palm oil exports towards high-value derivatives including Bio Propylene Glycol, margarine, and biodiesel. Expected to create around 2,900 jobs and commence operations by late 2028, it represents a concrete step towards the downstream industrial ambitions President Prabowo Subianto has repeatedly articulated. Meanwhile, PT Waskita Beton Precast Tbk (WSBP) completed its seventh CFADS debt repayment instalment of Rp 109.22 billion, bringing cumulative creditor payments under its peace agreement to Rp 650.87 billion, while continuing work on strategic infrastructure projects including toll roads and the DPR building at the new capital IKN.

Policy, Trade, and Investment

The week saw Finance Minister Purbaya announce the extension of the individual tax return filing deadline from 31 March to 30 April 2026, citing the overlap with Ramadan and Eid holidays and technical difficulties with the Coretax system – which Purbaya himself described as “spinning” during his own filing. As of 25 March, 9.07 million taxpayers had submitted returns, falling short of the 10 million target. On the trade front, Indonesia’s delegation headed to the 14th WTO Ministerial Conference in Yaoundé, Cameroon, to advocate for WTO reform, restoration of the dispute settlement mechanism, and fair treatment for developing nations in areas spanning fisheries subsidies, agriculture, and e-commerce. President Prabowo, meanwhile, reaffirmed that Indonesia’s Agreement on Reciprocal Trade with the United States – reducing tariffs from 32 per cent to 19 per cent and providing zero-tariff access for 1,819 Indonesian commodities – would not compromise national interests, particularly the downstreaming mandate for critical minerals.

The broader investment agenda remained active despite global headwinds. North Kalimantan maintained its position as the highest investment target province in Region 5 with a revised Rp 30.55 trillion goal, North Maluku’s Governor Sherly Tjoanda courted Bugis-Makassar entrepreneurs for food and logistics investments, and the PSBM XXVI gathering in Makassar brought together national leaders and business figures to strengthen eastern Indonesia’s economic networks. Danantara attracted headlines of a different kind as reports circulated of its potential interest in US independent film studio A24 – an investment the sovereign wealth fund said would be subject to rigorous due diligence and alignment with its mandate for strategic national returns.

Looking Ahead

The coming weeks will be defined by several converging developments. The anticipated summit between US President Donald Trump and Chinese President Xi Jinping in Beijing on 14-15 May – delayed from its original schedule due to the Iran conflict – carries significant implications for global trade dynamics and, by extension, for Indonesian exports and commodity prices. The OJK under its newly inaugurated Chair Friderica Widyasari Dewi faces an immediate agenda of stabilising capital market confidence, overseeing the KBMI bank upgrades, and accelerating sharia unit spin-offs. On the fiscal front, the government’s management of energy subsidy pressures, the SAL injection’s transmission into real lending, and the coal export duty set to take effect on 1 April will all test policy coherence in the face of sustained external shocks. Indonesia enters the second quarter of 2026 with genuine structural strengths – resilient banking fundamentals, an active downstreaming agenda, and a large domestic consumer base – but the Hormuz crisis has made clear that the nation’s energy import dependence and exposure to global volatility remain critical vulnerabilities that no amount of festive optimism can fully obscure.