Indonesian Businesses: The Bigger Risk is Not Price, But Supply

The longer the conflict in the Middle East drags on, the clearer its implications become for Indonesia’s economy. As the war approaches its seventh week with no sign of resolution, business concerns are shifting. This is no longer just about higher oil prices. It is about whether supply itself can be secured. For Indonesian companies, the risk calculus is changing. Rising costs can be managed. Supply disruptions cannot.

Across sectors, firms are beginning to grapple with a familiar but uncomfortable reality: uncertainty in energy and raw material availability poses a more immediate threat to operations than price volatility. Logistics bottlenecks, a weakening rupiah and softer demand are adding to the strain. But it is the prospect of disrupted supply chains that is emerging as the central concern.

This aligns with recent analysis by the IBC Institute in IBC Navigator Vol. 17, which warns that global conflict can spill over into the domestic economy through inflationary pressure, currency depreciation and higher capital costs. Asia, including Indonesia, remains particularly exposed to disruptions in global energy flows, especially if critical routes such as the Strait of Hormuz come under strain.

“In this environment, availability matters more than price,” said Denni Puspa Purbasari, chief economist at the Indonesian Business Council, in an interview with Kompas TV. “For businesses, the availability of crude oil and its derivatives, as well as rupiah stability, are the primary concerns.”

Companies are responding in predictable ways: cutting costs, diversifying their suppliers, delaying investment and hiring, and hedging where possible.

And therein lies the problem. There is only so much businesses can do. Corporate strategies can mitigate operational risks, but they cannot offset country-level vulnerabilities. Much will depend on how public policy responds.

Businesses are therefore looking to the government to safeguard energy supply, maintain macroeconomic stability and provide a predictable policy environment. In periods of heightened uncertainty, coordination between policymakers and the private sector becomes critical. Abrupt or poorly calibrated policy shifts, however well-intentioned, risk sending the wrong signal at the wrong time.