JAKARTA - Minister of Industry (Menperin) Agus Gumiwang Kartasasmita said that the conflict between the United States-Israel against Iran has the potential to affect the smooth supply chain of industrial raw materials as well as logistics costs used by the manufacturing sector.
"Every escalation of the conflict has the potential to affect energy prices, the smooth supply chain of industrial raw materials, and the logistics costs used by the manufacturing sector," Agus said in a statement in Jakarta, Thursday, March 5.
According to Agus, one of the most influential factors for the industrial sector is the potential for global energy distribution disruptions. The Middle East region, especially the Strait of Hormuz, is a vital route for world oil trade.
The reason is that about a fifth of global oil supplies pass through the route, so any disruption in the region can trigger a spike in international energy prices.
In recent days, the escalation of the conflict has even raised concerns about shipping and energy distribution activities in the region, which in turn triggered a spike in global oil prices.
It is known that the world crude oil price has increased significantly due to energy supply disruptions from the Middle East and increased geopolitical risks in the region.
Then, said Agus, the increase in global energy prices will have a direct impact on the manufacturing industry. This is because most industrial sectors use energy as a major production cost component.
"Industries such as petrochemicals, basic metals, cement, fertilizers and various other processing industry subsectors are very sensitive to fluctuations in energy prices," he said.
If global energy prices increase in the long term, Agus is worried, the cost of manufacturing industry production also has the potential to rise.
"This can certainly affect production efficiency and the competitiveness of industrial products in the domestic and export markets," said Agus.
In addition, geopolitical conflicts also have the potential to affect the availability of industrial raw materials from the global market. For Indonesia, the impact can be felt in several industrial sectors that are dependent on imported raw materials, such as the chemical, petrochemical, textile, metal industries, as well as the food and beverage industries.
"Geopolitical uncertainty has the potential to increase the cost of procuring raw materials and extend delivery times due to changes in global logistics routes," said Agus.
Agus added that disruptions to international trade routes could also affect the performance of manufacturing industry exports. "Geopolitical conflicts usually trigger global market volatility, so demand from export destination countries can fluctuate," he said.
Even so, Agus emphasized that the government continues to take proactive steps to maintain the resilience of the national industrial sector. One of the strategies carried out is to strengthen the upstream industry structure, increase the use of domestic raw materials and expand export market diversification.
"Strengthening the upstream industry and increasing the use of domestic products is very important so that the Indonesian manufacturing industry is not too dependent on global supplies that are vulnerable to geopolitical turmoil," explained Agus.
In addition, continued Agus, the government is also encouraging increased energy efficiency in the industrial sector as well as accelerating the transformation towards a green industry. This step is considered important to reduce dependence on fossil energy whose price is very influenced by global geopolitical dynamics.
"We will continue to coordinate with various stakeholders, including industry players, associations and related ministries/institutions, to ensure that the national manufacturing industry sector is still able to grow and be competitive in the midst of global economic dynamics," he concluded.
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