Indonesian on Alert Despite Rising Industry Index

RRI.CO.ID, Jakarta - The Indonesia’s Ministry of Industry, has highlighted the importance of remaining vigilant against global geopolitical dynamics and uncertainty, and their subsequent impact on the domestic industrial sector. The Special Staff and Spokesperson of the Ministry, Febri Hendri Antoni Arief made the warning during a press conference of Industrial Confidence Index (IKI), held in Jakarta on Thursday, 29 January 2026.

He also revealed that the January 2026 IKI rose by 2.2 points from December 2025 to reach 54.12. He stated that this increase was primarily driven by production preparations ahead of Ramadan and Eid al-Fitr. Although 20 subsectors are currently in the expansion zone with an index above 50, Febri emphasized that the government continues to closely monitor global conditions affecting domestic industries.

"We continue to observe global geopolitical fluctuations and international tariff wars. We are closely monitoring how this global uncertainty impacts domestic industry, particularly regarding export demand and the stability of the domestic industrial supply chain," he stated.

Febri outlined at least two main areas of focus for monitoring and mitigation. The Ministry is anticipating the impact of geopolitical tensions and trade wars on the global demand for Indonesian manufactured products. He mentioned that the government is considering the optimization of existing Free Trade Agreements (FTAs) and the diversification of export markets.

Risk mitigation against shipping logistics disruptions and exchange rate fluctuations is also being strengthened to maintain production cost stability, given the reliance on imported raw materials. Febri cited the use of Local Currency Settlement (LCS) facilities as a recommended solution to dampen the impact of foreign exchange volatility.

Furthermore, the Ministry is monitoring global energy price movements triggered by international conflicts, which significantly influence domestic industrial production costs.

He also added that several subsectors, such as footwear and electronics, are still experiencing contraction (with an index below 50). These subsectors are feeling the brunt of global uncertainty, particularly regarding their export orientation.

"Export-oriented industrial subsectors are still in a preparatory phase, observing how global uncertainty affects their demand. This global uncertainty includes political and geopolitical turmoil, as well as tariff wars between countries," he stated.

Despite the alertness, business optimism remains steady. The IKI survey shows that 72.58% of respondents are optimistic about business conditions for the next six months, an increase from the previous month. The survey also indicates that 78.5% of respondents reported their business activities are improving or remaining stable.

The release of the January 2026 IKI underscores the anticipatory measures being taken to maintain the momentum of national industrial growth amidst global economic and political turbulence.