INDEF: Geopolitical Conflicts Can Increase The Burden Of MSME Actors And Housewives

Illustration. (Photo: Doc. Antara)

JAKARTA - Head of the Center of Digital Economy and Small and Micro Enterprises (SMEs) INDEF Eisha Maghfiruha stated that high rupiah exchange rates due to geopolitical conflicts that occur can now increase the burden on MSME players and housewives.

The rupiah exchange against the increasing dollar will certainly have an impact on larger expenses," said Eisha Maghfiruha in an online discussion entitled Policies and Economic Fate in the Middle of Global War Tensions quoted from Antara, Saturday, April 27.

He said that the current depreciation of the rupiah due to the Iran-Israeli conflict had an impact on increasing production costs, thus increasing product prices.

Related to this, he assessed that high exchange rates can make the spending of housewives swell due to rising prices for basic commodities that are widely obtained imported, such as rice and soybeans.

In addition to housewives as consumers, Eisha said that the rising rupiah exchange rate is also burdensome for MSME actors as producers, especially those using raw materials from abroad.

"The increase in input prices has an impact on production costs," he said.

Although historically during the Asian monetary crisis in the late 90s, MSMEs were a business sector capable of surviving and supporting the national economy, he stated that now the situation is different.

According to him, in the past MSMEs used more local resources, but now trade transactions are increasingly open so that many MSMEs used imported raw materials or even became resellers of products from abroad.

"If indeed (the producer) cannot withstand the production burden, like it or not, it must be charged to a higher product price," said Eisha.

The latest conflict between Iran and Israel was triggered by an attack on the Iranian Consulate in Damascus, Syria on April 1.

Iran then launched a counter-attack by firing hundreds of ballistic missiles and unmanned aircraft at Israel on April 13.

In the early hours of Friday, April 19, Israel launched a missile that allegedly targeted an air base near Isfahan City, Iran.

At the close of trading Friday, April 19 afternoon, the rupiah exchange rate closed up 81 points or 0.50 percent to Rp16,260 per US dollar from the previous Rp16,179 per US dollar.