The Ministry Of Industry Calls Entrepreneur Optimism Down Due To Political Escalation In The Middle East

JAKARTA - The Ministry of Industry (Kemenperin) said that the pessimism of business actors towards business conditions in the next six months reached 9 percent in June 2025. This figure increased 0.6 percent compared to May 2025.

"The optimism of entrepreneurs decreased in June because business actors, both export-oriented and domestic, saw the development or escalation of politics in the Middle East," said Ministry of Industry spokesman Febri Hendri Antoni Arif in the release of IKI June 2025, quoted Tuesday, July 1.

Febri said the increase in energy prices due to the Israeli-Iran conflict was the main factor that pressured industry players.

"Almost all industries use energy in production activities. There are also industries such as fertilizers, glass and cement that rely on gas as raw material. They are very vulnerable to gas prices, energy prices," he said.

He also highlighted the surge in logistics costs as a result of the conflict. Trading routes that cross areas near the Middle East cause concerns among entrepreneurs.

According to Febri, this condition can trigger an increase in raw material prices, both directly and indirectly, due to exchange rate fluctuations. Conflict also has an impact on higher export distribution costs.

Data from the Ministry of Industry shows that the level of optimism of entrepreneurs in June 2025 reached 65.8 percent, down 0.8 percent compared to the previous month. This downward trend has been going on for seven consecutive months since October 2024.

Even so, said Febri, a number of industries remain optimistic about government policies and programs. He gave an example, the ceramic industry which recorded an increase in orders driven by government spending on infrastructure projects. "Even though they also convey that they are depressed about gas prices," he said.

In addition, he continued, the electricity equipment industry is also experiencing an increase in demand even though in general it is in a contraction phase.

The Industrial Trust Index (IKI) in June 2025 was at 51.84. This figure decreased by 0.27 points from the previous month which was recorded at 52.11. In addition, when compared to IKI in June last year at 52.50, the amount of IKI June 2025 also slowed down by 0.66 points, which was 51.84.