National industry is facing global challenges, including from the impact of the Russia–Ukraine war, which has created two main problems: a food crisis and an energy crisis.
“Regarding the food crisis, the Russia–Ukraine war has raised three issues, first reduced supply of food commodities such as wheat and vegetable oil,” Minister of Industry Agus Gumiwang Kartasasmita said in Jakarta on Wednesday (31/8).
The second issue is protectionism by countries to secure domestic food stocks; for example, India stopped wheat exports. Third, more food commodities are being converted into energy raw materials. These three issues raised the global food commodity price index by 32.5% (YoY), according to a World Bank report in June 2022.
In this regard, the Minister said the supply of raw materials for the domestic food industry will be secured. “Going forward, we are working to develop more local raw materials such as cassava flour, porang, sorghum, sago, arrowroot, Job's tears, foxtail millet, banana, breadfruit, taro, sweet potato and others to diversify processed food products,” he said.
Meanwhile, the energy crisis is evident in continuously rising energy prices. “The government is currently preparing plans to adjust fuel prices. According to our data, large and medium industries' (IBS) spending on fuel and lubricants in 2019 reached IDR 58.7 trillion, accounting for 1.3% of total production costs,” Agus said.
Using the 2019 figure to project 2021 with an assumed growth of 5%, fuel and lubricant spending in 2021 would reach IDR 60 trillion