After The COVID-19 Pandemic, The Domestic Industry Still Must Face New Challenges

Illustration (Photo: Doc. Antara)

JAKARTA - After escaping the COVID-19 pandemic, the domestic industry must face new challenges to survive.

Starting from Russia-Ukraine geopolitical conflicts that have an impact on rising energy prices, rising transportation prices, threats of inflation, to increased benchmark interest rates.

Center of Industry, Trade, and Investment researcher from Indef Ahmad Heri Firdaus said the increase in fuel oil prices (BBM) and the impact of geopolitical conflicts were felt by the domestic industry.

"First, regarding the increase in energy prices, which has raised transportation prices. Fuel increases, high inflation, benchmark interest rates increase. This means that credit interest rates are also higher, thus threatening expansion, which was previously ready to expand to be delayed," said Ahmad, in Jakarta, Friday, September 23.

Moreover, said Ahmad, the increase in transportation prices and also some raw materials have made production costs even more difficult. Ahmad admitted that he was worried that this condition would make entrepreneurs make adjustments in the form of reduced labor.

"So, the increase in production costs can cause delays in expansion, or even adjustment of production input, it is feared that they will reduce their workforce," said Ahmad Heri.

Therefore, according to Ahmadi, the government needs to help domestic industry players by providing stimulus, facilities and incentives.

The goal is to keep the industry running and still be able to create jobs and encourage increased investment.

"In order for the industry to continue running, say that facilitation is given in the context of the industry being under pressure, it must be assisted, say in logistics costs, export facilities, export ships are expensive, electricity rates are given for a certain hour. Anything that can have a direct impact on the industry," he said.

So far, he said, the government has only provided assistance to affected communities as compensation for the increase in fuel, but has not targeted the domestic industrial sector.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said that industrial capabilities were the main element for the economic resilience of a country during the pandemic.

The industry will encourage job creation, and require the trade sector in distribution, as well as encourage increased investment.

Therefore, the G20 must encourage increased efforts in the industrial, trade sector and to attract more investment.

According to him, Indonesia's membership in a number of forums such as the G20, ASEAN and others must be able to become a leader to strengthen profitable cooperation.

"Cooperation for smoother flow of goods and services needs to be carried out in meetings in forums like yesterday. Negotiations to lower non-diff rates, and cooperation in trading investments that are profitable to me, I think a lot," he said.

Not only that, said Ahmad, there are new challenges where currently a number of countries are carrying out export restrictions to protect their stock.

In forums such as the G20, it must be discussed further about the global supply chain, and it is convinced that it can establish cooperation without restrictions.

Global Crisis

Research Director of the Center of Reform on Economics (Core) Indonesia Piter Abdullah revealed that the current economic problem is at the global level, not domestic.

"What is clear is that we are facing global relations. Now the challenges are on the global level, not domestic," he said.

According to Piter, global problems have an impact on the Indonesian economy, such as the COVID-19 pandemic. The turmoil in the geopolitics of the Russia-Ukraine war which is still continuing is the trigger for the disruption of the global supply chain. So that there is a problem with the food and energy crisis which then triggers a spike in inflation in many countries.

"So this is because there are problems in the global which then have an impact on each country, so the solution must be global," he said.

Piter admitted that countries in the world should join hands to find solutions to these problems.

The global community is asked to solve the root of the problem, namely the tension of the goepolitical involving Russia and Ukraine.

"The solution is how these countries cooperate, multilateral agreements to overcome various problems that occur. The main thing is the source of the problem being solved. The source of the problem is geopolitical tension. Then supply barriers must be resolved. Otherwise, this will be sustainable," he said.

In line with Piter, Executive Director of the Center for Strategic and International Studies (CSIS) Yose Rizal Damuri said that Indonesia's economic condition would not be separated from the global economic condition.

So that what is happening at the global level will have an impact on the Indonesian economy, either directly or indirectly.

"We have felt this so far, the pandemic 2.5 years, now there is a geopolitical problem accompanied by supply chain and inflation problems, as well as strict macroeconomic policies," he explained.

Yose assessed that economic cooperation is absolutely necessary to make this global economic condition better and more conducive to economic recovery in all countries.

"The only way is economic cooperation. If there is no cooperation, and each way is alone, in fact each will harm other people or countries," he concluded.