US-Iran escalation poses potential threat to Indonesian energy and manufacturing sectors

Jakarta — Indonesia’s Trade Minister Budi Santoso has stated that escalating tensions between the United States and Iran could potentially pressure several Indonesian trade sectors, particularly those directly connected to energy and logistics costs.

Santoso identified the most significant impact would emerge if global oil distribution faced disruption, including the potential closure of the Strait of Hormuz. He noted that the energy sector would be the first to feel the effects.

“Fuel prices will certainly rise if this really happens with the Strait of Hormuz closure. Hopefully it does not occur,” Santoso said in Jakarta on Monday.

He indicated that the manufacturing sector represents one of the most vulnerable areas. Indonesian processing industries that depend on energy for production processes will face rising operational costs.

Furthermore, the export sector will encounter dual pressure: increased production costs and weakened global demand resulting from economic uncertainty.

“Our exports will certainly see costs rise. This means we and other countries are all affected. Other countries requiring raw materials are affected, and those producing goods are also affected,” he stated.

To address these risks, Santoso said the government emphasises the importance of protecting the domestic trade sector. Domestic consumption, which has served as a primary driver of economic growth, is considered a buffer against global volatility.

The government is also focusing on strengthening the domestic market and diversifying exports.