The US Dollar Continues to Strengthen, the Ministry of Industry Invites Industry Actors to Use the Rupiah for Transactions

Ministry of Industry spokesperson Febri Hendri Antoni Arif (Photo: Theresia Agatha/VOI)

JAKARTA - The weakening of the rupiah exchange rate against the United States dollar (USD) has put pressure on domestic industries, given that some raw materials are still dependent on imports. The government has also begun to encourage industrial players to reduce their dependence on US dollar transactions.

Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arief said that around 24 percent of the structure of national industrial raw materials still comes from imports. This condition makes production costs prone to rise when the rupiah weakens.

According to Febri, the use of the Local Currency Transaction (LCT) scheme needs to be expanded so that the import transaction of raw materials is no longer entirely using the US dollar. Thus, the pressure on the industry due to the weakening of the rupiah can be minimized.

"The structure of industrial inputs, especially the structure of raw materials, is 24 percent imported. Well, besides the crisis in the Strait of Hormuz, we are currently experiencing a weakening of the rupiah exchange rate. With a raw material structure of 24 percent of imports, our future strategy will try to appeal to the industry to continue to use the LCT facility, Bank Indonesia," said Febri in the May 2026 IKI Release at the Ministry of Industry's office, Jakarta, quoted Wednesday, May 27.

Based on trading, Tuesday, May 26, the rupiah closed down 0.29 percent or 52 points to Rp17,795.50. At the same time, the US dollar index weakened 0.17 percent to 99.07.

With the LCT scheme, importers can buy goods from abroad without using the currency of Uncle Sam's country. Transactions are carried out using local currency according to the agreement of both parties.

"So, the purchase of raw materials by industry, importers who supply raw materials to industry do not use dollars, but use local currencies," he said.

In addition, industrial actors are also asked to change the source of imported raw materials from other countries to reduce the risk of global supply chain disruptions. This step is considered important in the midst of global uncertainty, including tensions in the Strait of Hormuz due to conflicts between Iran VS US and Israel.

Not only that, Febri also encouraged investors to build production facilities for raw materials in the country to replace imports. He assessed that the current conditions could be a momentum to strengthen import substitution in Indonesia.

"We say this, it's time for investors to build, invest in Indonesia to build production facilities that produce substitutes for imported raw materials," he added.