This Week in Indonesian Business and Investment (6-12 Mar 2026)

The week of 6–12 March 2026 proved to be one of the most turbulent and consequential in recent Indonesian economic memory, dominated by a Middle Eastern crisis that reverberated across every corner of the domestic financial landscape while, paradoxically, generating unexpected commercial windfalls for the archipelago’s resource exporters.

The Hormuz Crisis and Its Domestic Fallout

The defining story of the week was the escalating military conflict between the United States, Israel, and Iran, which erupted in earnest on 28 February and intensified throughout the period under review. Iran’s effective blockade of the Strait of Hormuz – through which approximately one-fifth of the world’s oil supply normally transits – triggered a historic surge in crude prices, with Brent briefly exceeding $100 per barrel and WTI touching $119 before retreating following US President Donald Trump’s signals that military operations were “very complete.” The human dimension was brought home for Indonesian readers by PT Pertamina Internasional Eksplorasi dan Produksi, which successfully evacuated 19 workers from Basra and Dubai over a gruelling 14-day operation complicated by airport closures. Two Pertamina tankers, the Pertamina Pride and Gamsunoro, remained stranded in the Arabian Gulf awaiting safe passage, while the government confirmed it was in diplomatic negotiations to secure their release.

For Indonesia’s macroeconomy, the consequences were immediate and multifaceted. The rupiah weakened to as low as Rp 17,001 per US dollar on 9 March before recovering to around Rp 16,885 by week’s end, as Finance Minister Purbaya Yudhi Sadewa assured markets that the currency’s depreciation – at roughly 0.3 per cent since the conflict’s outbreak – was more modest than peers including the Malaysian ringgit and Thai baht. The Jakarta Composite Index (IHSG) plunged 3.27 per cent to 7,337 on Monday before staging a partial recovery to close Thursday at 7,362, dragged lower by energy market anxiety and geopolitical risk premiums. Phintraco Securities analysts warned that sustained oil prices above $90 per barrel risked fuelling domestic inflation, widening the fiscal deficit, and dampening economic growth.

The fiscal dimension drew close attention from parliament and the executive branch alike. Coordinating Minister for Economic Affairs Airlangga Hartarto was scheduled to brief President Prabowo Subianto on Friday, with the government calculating that each one-dollar rise in crude prices above the budget assumption of $70 per barrel adds approximately Rp 6.7 trillion to the national deficit. With oil briefly exceeding $113 per barrel, the stress tests conducted by Finance Minister Purbaya indicated that a sustained annual average above $92 per barrel would push the budget deficit beyond the constitutionally mandated 3 per cent of GDP ceiling. By the end of February, the deficit had already reached Rp 135.7 trillion (0.53 per cent of GDP), reflecting the government’s deliberate front-loading of expenditure – a policy the minister defended as prudent stimulus design rather than fiscal slippage. The Parliamentary Budget Committee, chaired by Said Abdullah, proposed four policy buffers: sharpening priority programmes, deferring non-urgent spending, refining subsidy targeting, and strengthening productive support for the country’s 43.9 million MSME operators.

Yet the crisis was not without silver linings for Indonesia. As a major urea producer – PT Pupuk Indonesia is the largest in the Asia-Pacific – the country stood to benefit substantially from soaring fertiliser demand as global supply chains from the Gulf were disrupted. Deputy Agriculture Minister Sudaryono confirmed that multiple countries were actively seeking Indonesian urea, allowing older factories to resume production to meet surging international orders. Coal prices similarly surged 28 per cent year-to-date to $107.50 per tonne, prompting Finance Minister Purbaya to forecast that windfall commodity revenues could partially offset the higher energy subsidy burden.

Banking Sector Posts Strong Numbers

Against this turbulent backdrop, several of Indonesia’s major banks reported impressive results. PT Bank Tabungan Negara (BTN) delivered a net profit of Rp 503 billion for the period through February 2026, a staggering 281.9 per cent year-on-year increase driven by a 54.7 per cent surge in net interest income to Rp 2.39 trillion. PT Bank Central Asia (BCA) held its annual shareholders’ meeting on Thursday, approving a record 72 per cent dividend payout ratio – the highest in the bank’s history – amounting to Rp 336 per share and totalling Rp 41.3 trillion. The bank also secured approval for a Rp 5 trillion share buyback programme and announced plans to distribute interim dividends up to three times annually from the 2026 financial year. PT Bank Negara Indonesia (BNI), having already approved a Rp 13.03 trillion dividend at its annual meeting on 9 March, further authorised a Rp 905.48 billion share buyback. PT Bank Jago (ARTO) reported net profit after tax of Rp 276 billion for 2025, a 115 per cent increase year-on-year, with its customer base expanding to 18.2 million users. Superbank, now elevated to the KBMI 2 classification following its December IPO, posted a pre-tax profit of Rp 143.3 billion in 2025 with net interest income surging 160 per cent. PT KB Bank held an extraordinary shareholders’ meeting to approve new leadership – including Tae Doo Kwon as Deputy Board Chair and two new directors – as part of an accelerated digital transformation push following the bank’s return to profitability in the third quarter of 2025.

Capital Markets, Governance, and the OJK Transition

The week also marked a pivotal moment for Indonesia’s capital market governance. Parliament’s Commission XI approved Friderica Widyasari Dewi as the new Chair of the Financial Services Authority (OJK) for the 2026–2031 term, and confirmed Hasan Fawzi as head of capital market supervision. Fawzi set an ambitious target of Rp 25,000 trillion in Indonesia Stock Exchange capitalisation by 2031 – roughly 80 per cent of GDP – alongside a target of 30 million registered investors and average daily transaction values of Rp 35 trillion. The appointments came against a backdrop of significant institutional pressure: MSCI had issued a downgrade warning triggering an estimated $120 billion in market value losses, while Moody’s and Fitch had both revised Indonesia’s sovereign outlook to negative. The new OJK leadership announced plans to raise minimum free float requirements for listed companies to 15 per cent over three years as part of a transparency and governance reform agenda.

Corporate Transformation and Industrial Moves

PT Bumi Resources (BUMI) unveiled a striking new corporate logo inspired by topographical contour lines, signalling its strategic transformation from a coal-focused enterprise into a diversified natural resources company pursuing gold, copper, and bauxite. The rebranding was accompanied by news of a majority stake acquisition in Australia-based Jubilee Metals for approximately AUD 31.47 million. BUMI also signed a memorandum of understanding with PT RMK Energy to develop coal logistics infrastructure in South Sumatra through a new haul road and loading station network connected to Kereta Api Indonesia’s railway system.

In the telecommunications sector, PT Telkom Indonesia pressed ahead with its TLKM 30 transformation strategy, confirming plans to reduce its subsidiary portfolio from approximately 60 entities to just 14 through divestitures, mergers, and closures. Danantara, which celebrated its first anniversary this week with President Prabowo in attendance, directed Telkom to consolidate all state-owned enterprise fibre optic assets under its InfraNexia subsidiary, with targets to raise external fibre service revenue from 15 per cent to 25–40 per cent of the total. Prabowo praised Danantara’s 300 per cent improvement in return on assets during its first year, whilst setting a minimum 5 per cent ROA target – equivalent to $50 billion annually – as the next milestone.

The electric vehicle market drew attention from the Indonesia International Motor Show (IIMS) 2026, which concluded with Rp 95 trillion in total transaction value and recorded a 30 per cent surge in EV sales, with electric and plug-in hybrid vehicles now comprising over 40 per cent of car purchases. Electric motorcycles surged nearly 97 per cent year-on-year, while the broader automotive market saw wholesales of 81,159 units in February, up 22 per cent month-on-month, with Toyota retaining market leadership at 22,522 units.

The Eid Economy

Running as a counterpoint to geopolitical drama was the vibrant domestic consumer story unfolding ahead of the Eid al-Fitr holiday beginning 14 March. BSI prepared Rp 45 trillion in cash reserves across 162 branch offices; BRI allocated Rp 25 trillion and BCA adjusted branch schedules to manage peak transaction demand. Garuda Indonesia Group prepared 1.3 million flight seats across 7,634 frequencies. KAI Logistics reported a 5 per cent rise in motorcycle shipments, while Ancol Taman Impian braced for 580,000 visitors with a “Festival Raya Kemenangan” programme. Thrift traders at Pasar Senen reported Rp 3 million in daily revenues, Kyazaofficial’s online Muslim fashion sales tripled, and seasonal hamper vendors in the Cikini district reported 50 per cent revenue growth. Pertamina offered a 10 per cent discount on aviation fuel across 37 airports to ease airline ticket prices, while Pegadaian launched interest-free pawning up to Rp 2.5 million through April.

Looking Ahead

The coming week will test Indonesia’s resilience on multiple fronts. With Eid holidays commencing on 14 March and the Strait of Hormuz situation remaining fluid, the government will face the simultaneous challenge of managing a 143.9 million-person mass mobility event whilst monitoring oil price trajectories against a budget stress-test ceiling of $92 per barrel. Airlangga’s briefing to Prabowo on ASEAN-level coordination with fellow economic ministers – who are convening specifically to address the Middle East crisis – suggests Indonesia is seeking collective regional cover rather than acting unilaterally. The confirmation of Friderica and Fawzi at OJK marks the beginning of what will be a critical window to demonstrate credibility to MSCI and the rating agencies, while BCA’s record dividend and the broader banking sector’s robust early-year numbers offer grounds for measured optimism. If the conflict de-escalates as Trump signalled and commodity windfalls materialise as the Finance Minister projects, Indonesia may yet navigate this period of global turbulence with its fiscal framework intact and its growth trajectory – targeted at 5.4 per cent for 2026 – broadly on course.