CIPS says UMKM under pressure after Pertamax price hike
Small businesses face a double hit from weaker household spending and higher import raw material costs, CIPS warns.
Center for Indonesian Policy Studies (CIPS) said the increase in non-subsidized fuel prices such as Pertamax risks squeezing micro, small and medium-sized enterprises in Indonesia. Senior researcher and policy analyst Hasran said higher transportation costs could prompt households to curb spending, including nonessential items such as dining out, ready-to-eat food, entertainment, recreation and lifestyle products. At the same time, UMKM face higher production costs as the rupiah weakens against the US dollar, pushing up the price of imported raw materials such as soybeans, wheat and sugar. CIPS urged the government to prepare short-term measures to maintain macroeconomic stability and the exchange rate, as well as long-term reforms through cutting non-tariff barriers, reviewing import tariffs on raw materials, simplifying export-import procedures, strengthening logistics and digitizing trade services.