This Week in the Indonesian Economy (6-12 Mar 2026)

The week of 6 to 12 March 2026 will likely be remembered as one of the most consequential in recent Indonesian economic history – not because of any single domestic development, but because a distant conflict reshaped the national agenda with remarkable speed. The eruption of open military hostilities between the United States, Israel, and Iran from 28 February onwards, and Iran’s subsequent closure of the Strait of Hormuz, sent crude oil prices surging past US$100 per barrel and forced Jakarta to confront, in the starkest possible terms, the fragility of its energy security architecture.

The Hormuz Shock and Indonesia’s Energy Reckoning

For much of the week, the Prabowo administration was in managed crisis mode on the energy front. With Brent crude reaching as high as US$110 per barrel at points during the period, Energy and Mineral Resources Minister Bahlil Lahadalia found himself summoned to the Presidential Palace for a two-and-a-half-hour meeting with President Prabowo Subianto, emerging with a set of directives that ranged from the immediate to the transformational. On the immediate side, the government pledged that subsidised fuel prices – including Pertalite and Biosolar – would not rise until after Eid al-Fitr, with the state budget absorbing the gap between the US$70 per barrel budget assumption and the far higher market reality. President Prabowo approved a supplementary “buffer fund” to cover the expanded subsidy bill.

Two Pertamina International Shipping tankers, the VLCC Pertamina Pride and the Gamsunoro, remained stranded in the Arabian Gulf for much of the week, unable to transit the Hormuz Strait. Two others, the Paragon and Rinjani, successfully exited the conflict zone, though they were destined for export markets in Kenya and India rather than domestic supply. Pertamina Chief Executive Simon Aloysius Mantiri confirmed the company was actively diversifying crude sourcing to Africa and the Americas, whilst the Foreign Ministry engaged Iranian authorities over safe passage. Minister Bahlil disclosed that only 20 to 25 per cent of Indonesia’s crude imports transit the Hormuz Strait, with the remainder sourced from Africa, Angola, Brazil, Australia, and increasingly the United States – a diversification strategy that, the government argued, insulated Indonesia from the worst of the shock. Plans were announced to shift 25 per cent of crude imports to US suppliers, though Bahlil acknowledged that shipping times from America run to approximately 40 days compared to two to three weeks from the Middle East.

The deeper structural vulnerability that the crisis exposed was Indonesia’s strategic petroleum reserve, which stands at only 20 to 25 days of consumption – a figure that Finance Minister Purbaya Yudhi Sadewa and analysts alike noted falls dramatically short of the International Energy Agency’s 90-day standard. Bahlil revealed that private investors are already lined up to construct new crude oil storage facilities, with a target of expanding capacity to three months, at an estimated cost of some 72 trillion rupiah. MPR Deputy Chairman Eddy Soeparno used the moment to press publicly for the urgency of energy independence, citing Indonesia’s 3,600 GW renewable energy potential, while parliament’s Energy Commission called on Pertamina to prioritise domestic production for domestic consumption.

Against this backdrop, President Prabowo ordered the construction of 100 gigawatts of solar power capacity “in the shortest possible timeframe” and directed the replacement of diesel-powered electricity generators (PLTD) with solar and geothermal alternatives. The government also disclosed that biodiesel B50 road testing had reached 40,000 kilometres of a 50,000-kilometre target, with full implementation expected in the second half of 2026, while acceleration to B60 was flagged as a possibility if disruptions persisted. Meanwhile, the National Committee for Sharia Economics and Finance (KNEKS) advanced proposals to finance the 100 GW solar programme through green sukuk and Islamic social funds, drawing on Indonesia’s estimated 327 trillion rupiah in annual zakat potential.

The coordinated international response – the International Energy Agency’s unanimous agreement among 32 member states to release 400 million barrels of strategic reserves, the largest such intervention in the IEA’s history, including 172 million barrels from the US Strategic Petroleum Reserve – provided some market relief, with Brent crude moderating to around US$87 to US$99 per barrel after initial spikes. But analysts cautioned the release covered only roughly a quarter of the potential daily shortfall if the Hormuz Strait remained fully closed, and Indonesia’s LPEM FEB UI forecast inflation easing to between 3.07 and 3.51 per cent year-on-year in March, though significant uncertainties remained.

The week also brought a notable discovery: Malaysian energy company Petronas confirmed the first hydrocarbon find in the Barokah-1 exploration well in the North Ketapang Block off East Java’s coast, operating with a 51 per cent stake alongside Pertamina Hulu Energi North Ketapang and Earthon. The find added a note of longer-term optimism to an otherwise anxious energy week. PT Pertamina EP Zone 4, meanwhile, set a 2026 production target of 30,305 barrels per day, part of the broader effort to reduce import dependency.

Eid Preparations: Infrastructure, Transport, and Prices

Even as geopolitical fires burned abroad, the domestic machinery of Indonesia’s annual Lebaran exodus ground into motion with characteristic intensity. Transport Minister Dudy Purwagandhi projected 143.91 million travellers during the 2026 holiday period – roughly 50.6 per cent of the population – with peak outbound traffic forecast for 14 to 15 March and 18 to 19 March, and return peaks on 24 to 25 and 28 to 29 March. PT Jasa Marga projected some 3.5 million vehicles departing Greater Jakarta through four main toll gates, with peak outbound traffic on 18 March.

To manage the surge, the government deployed an extensive toolkit. PT Jasa Marga offered a 30 per cent toll tariff discount across nine strategic sections on 15 to 16 March and 26 to 27 March, deliberately timed to shift travel away from peak congestion dates. Ten functional toll road sections spanning 291 kilometres across Sumatra, Java, and Kalimantan were opened free of charge, including the new Prambanan-Purwomartani segment of the Yogyakarta-Solo toll road – which reduces travel time significantly and features ornamental Javanese Hanacaraka script at its toll gate. The Bawen-Ambarawa section of the Yogyakarta-Bawen corridor opened from 13 March, expected to divert 7,000 of the 18,000 daily vehicles from the notorious Bawen junction bottleneck. The Sigli-Banda Aceh Toll Section 1, opened functionally in December 2025, was confirmed ready to serve the exodus while also supporting disaster relief logistics in flood-affected Aceh Tamiang.

PT ASDP Indonesia Ferry projected 5.82 million ferry passengers – a 9 per cent increase on 2025 – and implemented a unified tariff system offering savings of 40 to 51 per cent, alongside a 100 per cent discount on harbour service fees across seven routes and 14 ports. ASDP deployed 55 vessels on the critical Ketapang-Gilimanuk crossing alone. A fire on the KMP Portlink VII ferry at Ketapang Port on 11 March, attributed to an electrical short circuit, caused no casualties and did not disrupt the broader exodus. InJourney Airports mobilised 37 airports and 15,400 personnel, projecting 9.03 million air passengers, while Pertamina announced a 10 per cent aviation fuel discount at 37 airports and the Whoosh high-speed train restored full 62-daily-service operations from 14 March following a temporary reduction for cable relocation work.

On the roads, the Ministry of Public Works reported 93.5 per cent of the 47,603-kilometre national non-toll network in sound condition, with 95.52 per cent of identified potholes repaired. The newly launched Transjabodetabek SH2 bus route connecting Blok M to Soekarno-Hatta Airport – inaugurated by Jakarta Governor Pramono Anung and Tangerang Mayor Sachrudin on 12 March – offered airport travellers a dramatically cheaper option at Rp 3,500 for an initial three-month promotional period, though the government signalled fares would rise to Rp 10,000 to Rp 15,000 thereafter given the subsidy burden. Separately, the “ojol crisis” – a shortage of ride-hailing drivers during peak hours attributed to budget fare schemes that left drivers earning as little as Rp 1,000 per kilometre – disrupted urban commuters and online food businesses across Greater Jakarta, prompting calls from both drivers and restaurant operators for systemic reform of platform pricing.

Other Significant Developments

The week produced several additional stories of note. Jakarta’s Bantargebang landfill suffered a devastating landslide on 8 March, killing five workers and forcing the provincial government to activate the Rorotan Refuse Derived Fuel plant at an initial capacity of 300 tonnes per day, scaling towards 1,000 tonnes. Governor Pramono proposed three new waste-to-energy plants at Bantargebang, Rorotan, and Sunter with a combined capacity of 6,500 to 7,000 tonnes daily, while construction of four facilities in Denpasar, Bekasi, Bogor, and Yogyakarta was announced to begin in June 2026, with Chinese operators Wangneng and Zhejiang Weiming selected as partners. The crisis underscored the urgency of Jakarta’s waste reform agenda.

Indonesia’s Special Economic Zones continued to demonstrate their value: a University of Indonesia and Prospera study found that the country’s 25 SEZs attract 77 per cent more investment than non-designated regions, with cumulative investment reaching Rp 336 trillion and 249,000 workers employed since 2012. Danantara Indonesia marked its first anniversary with President Prabowo emphasising the sovereign wealth fund’s commitment to integrity and long-term governance, reporting a 300 per cent increase in return on assets during 2025 and US$26 billion in downstream industrialisation investments. Bali Governor Wayan Koster reported an 8 per cent rise in foreign tourist arrivals ahead of Nyepi and Eid, though the Iran conflict had disrupted nine international flight routes through Soekarno-Hatta and Bali airports, affecting around 46,000 passengers. InJourney moved to prepare parking facilities at Lombok and Kertajati airports for Middle Eastern carriers including Emirates and Etihad.

Outlook

The week ending 12 March 2026 crystallised two parallel narratives for Indonesia: the immediate, well-managed execution of the country’s largest annual logistics exercise, and the longer strategic reckoning with energy vulnerability that the Hormuz crisis forced to the surface. With Eid al-Fitr approaching on 20 to 21 March, the government’s ability to hold fuel prices stable while managing the exodus will be tested in real time. Beyond the holiday, the critical questions concern execution: whether the accelerated B50 rollout, the 100 GW solar directive, the new oil storage investment programme, and the supply diversification away from the Middle East can move from presidential instruction to operational reality at the pace the moment demands. Finance Minister Purbaya’s confidence in Q1 growth of 5.5 to 6 per cent – underpinned by manufacturing PMI of 53.8 and 69 consecutive months of trade surplus – suggests that Indonesia enters this period of turbulence from a position of relative macroeconomic strength. Whether that foundation proves sufficient to absorb a prolonged energy shock will define the economic narrative well into the second quarter of 2026.