Tensions In The Middle East And Global Gejolak, New Challenges For Sustainable Infrastructure Development In Indonesia

Photo: Doc. PT Indonesia Infrastructure Finance (IIF)

JAKARTA - The government is aware of the continued impact of the escalation of global uncertainty on the Indonesian economy. The war in the middle east to the trade war is referred to as a trigger for weakening exports, pressure on the rupiah exchange rate, and a surge in global commodity prices.

This statement was delivered directly by the Minister of Finance, Sri Mulyani Indrawati in a press conference on the June 2025 edition of our APBN at the office of the Ministry of Finance, Jakarta, on Tuesday 17 June. In her statement, she considered that the current global situation formed a complex combination of risks: rising inflation amid the slowdown in the world economy.

The risk for Indonesia is also worthARY of. The weakening of the global economy will have an impact on Indonesian export goods. Commodity prices have indeed increased sharply, but not because of supply-demand factors, but due to disruption," he said.

In the midst of this increasingly uncertain global landscape, the national infrastructure development sector also faces new challenges. In this regard, PT Indonesia Infrastructure Finance (IIF) needs to emphasize that the transitional momentum towards sustainable development must continue and become the main goal of reducing Indonesia's dependence on fossil energy and building more environmentally friendly and sustainable infrastructure.

IIF Chief Investment Officer, M. Ramadhan Harahap (Idhan), explained that the conflict in the middle east has had a systemic effect on the global market, especially in the energy and financial sectors.

The Middle East Conflict puts direct pressure on world oil prices and creates high volatility in the financing sector. This has an impact on cost of capital projects, especially for infrastructure with a high dependence on fossil fuels or imported equipment," said Idhan, in his statement, Tuesday, July 1.

In line with this statement, IIF views this global crisis as a catalyst to accelerate structural reforms in the infrastructure sector towards a more resilient and adaptive system to change. According to Idhan, increasing global energy prices can strengthen the appeal of renewable energy projects such as geothermal, PLTS, and biogas.

"We are at a turning point. This crisis actually strengthens the argument that Indonesia must accelerate energy independence through stable and measurable green projects," he added.

This is also in line with the government's recent steps to inaugurate the Battery Energy Storage System (BESS) downstream project in Karawang last June 29. On this occasion, President Prabowo Subianto believes that energy independence in Indonesia can be achieved more quickly, namely in 5-6 years. For this reason, the construction of a battery factory for electric vehicles and solar energy storage systems is very necessary.

The IIF financing portfolio does lead to infrastructure projects that directly contribute to sustainable development goals (TPB). In addition to financing, IIF also strengthens the resilience of national projects through comprehensive ESG Advisory services, to ensure that these projects are not only economically viable, but also resilient to environmental and social pressures at the global level.

"We are designing financing that is adaptive to global risks, both in terms of finance, environment, and governance. This is important so that today's projects do not become a burden for future generations," explained Idhan.

In closing, Idhan said that IIF will continue to bridge national development needs with global dynamics that are changing rapidly, as well as strengthening cooperation with ESG-oriented multilateral partners and investors.

"This geopolitical challenge is not an excuse to stop. It is a reminder that future infrastructure must be stronger, greener, and more independent," he concluded.