Government Asked To Build A Tough Energy Supply Chain To Face The Impact Of Middle East Conflict

JAKARTA - Member of Commission VI of the House of Representatives Amin Ak asked the government to build a more resilient energy supply chain to deal with the impact of the Iran-Israeli conflict.

"Build a more resilient supply chain, including ensuring food and energy supply runs smoothly," Amin said in Jakarta, quoted from Antara, Tuesday, April 23.

According to Amin, the construction of a more resilient supply chain is important to deal with the development of the situation caused by the conflict between Iran and Israel.

He explained that the lower rupiah exchange rate accompanied by rising oil prices could result in an increase in the subsidy budget or compensation.

The figure, who is also a member of the DPR RI's Energy Committee, assesses that the increase in world oil prices can be burdensome for the state budget because energy subsidies will swell.

On the other hand, he said, reducing or removing energy subsidies can burden the community with potential chain effects, namely increasing the price of basic necessities.

Global supply chains disrupted by war can cause manufacturers to look for raw materials from elsewhere, which in turn increases production costs and charges these costs to consumers, he said.

Amin also reminded that the impact of weakening the rupiah exchange rate, which if not handled properly, could disrupt Indonesia's economic growth, given the large amount of foreign debt, including government debt, BUMN and the private sector.

"Protecting (hedging) the rupiah exchange rate against the US dollar needs to be done," said Amin.

On the occasion, he also called on the government to encourage de-escalation and self-control among countries involved in conflict in the Middle East.

"Intensive communication with world leaders, including Iran, Saudi Arabia, Jordan, Egypt and European countries is needed to emphasize the importance of restraint and reduce the escalation of conflict," Amin said.

The statement departed from Amin's concern about domestic oil supply stability.

Although Indonesia does not import oil from Iran, Amin stressed that global oil supply could be affected because Iran is one of the largest oil producers in the world.