Entrepreneurs Association: Hamas-Israel War Will Affect Indonesia's Economy

TEMPO.CO, Jakarta - The Indonesian Entrepreneurs Association (Apindo) said that Hamas' war with Israel would have an impact on the domestic economy, especially industrial conditions. Apindo's head of Manufacturing Industry, Bobby Gafur Umar, said that a war in the Middle East would have an impact on the business climate in Indonesia, especially in the energy sector.

The impact, he said, is already seen from the increasing prices of energy. As a result, there will be an increase in the price of raw materials, because not everything can be produced in Indonesia.

"If it is expensive and the goods are not available, like what happened during the pandemic, the climate for industrial growth will be disrupted," Bobby said at a press conference at Astra Tower in South Jakarta, Wednesday, October 11.

Indonesia, he said, only produces around 600,000 barrels of petroleum per day whereas the consumption volume is between 1.2 million and 1.5 million barrels per day.

Given the high volume of imports for fuel, a global hike in oil prices will automatically disrupt industries in Indonesia, and "automatically disrupt the government's financial health," he said.

The conflict will also negatively affect the ceramic industry, which requires gas as a raw material. Right now, he said, gas for domestic industry is set at US$6 for seven industrial sectors in the group of recipients of the Certain Natural Gas Price (HGBT) facility. If gas prices rise due to the situation in the Middle East, industries that require gas raw materials will suffer from it.

The exports of textiles and textile products (TPT) are also likely to be affected as Indonesia's export destinations for these products have shifted since the pandemic—from America and Europe to Middle Eastern countries. If the textile export market to the Middle East is disrupted, the industry will be shaken.

Apindo chairperson Shinta W. Kamdani added that the Palestine-Israel conflict also has the potential to further weaken the rupiah exchange rate—something that has already begun.

RIANI SANUSI PUTRI

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