In the face of US-Iran turmoil, the Ministry of Industry invites the energy efficiency industry and uses LCT

JAKARTA - The Ministry of Industry (Kemenperin) highlights the impact of the escalation of the conflict between the US-Israel VS Iran on the domestic manufacturing industry.

Ministry of Industry spokesman Febri Hendri Antoni Arif revealed that based on the survey of the industry confidence index (IKI) in March 2026, the impact of turmoil in the Middle East is still relatively limited to certain subsectors.

The most affected subsector is the industry that relies on raw materials from the Middle East and is vulnerable to energy logistics crises, such as in the petrochemical industry. Even so, Febri emphasized, disruptions in upstream industries such as petrochemicals will have an impact on various downstream industries of end products.

Febri gave an example, the pressure being experienced by the plastics industry has an impact on the supply and price of packaging in the food and beverage industry as well as plastic user industries such as automotive. He emphasized, until now the upstream industry is still producing using existing raw material supplies.

However, there has been an adjustment in the market, including through an increase in product prices. In addition to raw materials, Febri reminded, the war in the Middle East has an impact on the energy logistics crisis as well as an increase in logistics costs for the import of raw materials and the export of products.

If this condition continues, Febri said, the impact will suppress the performance of IKI and the Purchasing Managers' Index (PMI) of Manufacturing in the following months. Facing this situation, the Ministry of Industry appeals for industrial actors to carry out energy efficiency.

"We from the Ministry of Industry appeal to industry players and all components of the domestic industry ecosystem, first, to carry out energy efficiency. We hope that the industry will immediately adapt to carrying out energy efficiency and anticipate rising logistics costs," said Febri in the IKI March 2026 Release at the Ministry of Industry's office, Jakarta, Tuesday, March 31.

In addition, Febri also highlighted the position of the rupiah exchange rate which broke through the psychological level of Rp17,000 per US dollar. He appealed, that industrial actors who import raw materials use the Local Currency Transaction (LCT) facility from Bank Indonesia (BI) to mitigate the impact on exchange rate pressure.

On the other hand, Febri encourages export-oriented industries to take advantage of this momentum to spur sales to the global market.

"Now is the time to take advantage of the opportunity to increase the competitiveness of manufacturing products from other countries, especially those in the global market. The opportunity to flood the global supply chain with products (from) domestic industries," he said.

According to Febri, the government will try to support the domestic industry. One of them is by maintaining the demand for industrial products in the domestic market.

"The Ministry of Industry will work with other ministries, especially so that the domestic demand for industrial products can be protected from flooding with imported products," he explained.

The government is also continuing to monitor household consumption, which will also have an impact on the demand for manufacturing industry products. According to him, various government programs in the fields of energy security, food security and priority programs such as Free Nutritious Meals, Red and White Village Cooperatives and the 3 Million House Program are part of efforts to maintain demand for manufacturing products in the country.

Furthermore, said Febri, the government will continue to encourage import substitution programs through strengthening the domestic industry supply chain which relies on local raw materials.

"We believe that the industry, based on the experience of various previous crises such as the COVID-19 pandemic, has already learned a lesson to face the crisis and challenges quite strongly in the future," he explained.

The Ministry of Industry noted that the industry confidence index (IKI) in March 2026 reached 51.86.

This figure dropped drastically to 2.16 points compared to IKI in February 2026 which was recorded at 54.02.

"IKI in March 2026 reached 51.86, still expanding even though it slowed down 2.16 points compared to February 2026 at 54.02. In addition, the value of IKI also slowed down 1.12 points compared to the value of IKI in March last year at 52.98," said Febri.

He added that in March, there were 16 subsectors that experienced expansion. The contribution of these 16 subsectors to gross domestic product (GDP) was 78.3 percent.

Meanwhile, there are seven sub-sectors of industry that have contracted, including the beverage industry, the tobacco processing industry, the wood industry, goods from wood and cork (excluding furniture) and woven goods from bamboo, rattan and the like.

Then, the chemical materials and goods from chemicals, non-metallic mineral goods industry, computer industry, electronic and optical goods, and electrical equipment industry.

According to him, the decline in industry performance in the third month occurred due to a combination of several factors. The main factor is seasonal due to the passing of a number of major religious days such as Chinese New Year and Lebaran. This condition makes the industry reduce production.