The Impact of the Russia-ukraine War on Indonesia

The Russia-Ukraine war has had geopolitical impacts throughout the world, even for countries as geographically distant as Indonesia. In Indonesia itself, the impacts are very diverse, providing advantages and drawbacks. On the positive side, this conflict has caused a spike in global commodity prices, thus benefiting Indonesia as a major exporter of natural resources. Increasing demand for commodities such as palm oil and coal, these two commodities are the leading commodities exported by Indonesia. In this way, exports of Indonesia’s superior commodities can increase the value of imports and encourage an increase in foreign exchange reserves. In addition, Indonesia’s diplomatic stance during this crisis has positioned Indonesia as a neutral party, thereby fostering stronger relations with Russia and Ukraine. However, the downside emerged in the form of economic uncertainty caused by the impact of the war on global markets. The Russian-Ukraine war could have an impact on increasing oil prices which are estimated to increase to more than $100/barrel. Meanwhile, fuel prices increased in the US and Europe by 30%. Apart from that, war could risk the supply of commodities and logistics being hampered, and main infrastructure such as ports in the Black Sea area being damaged as a result of the Russia-Ukraine war. In essence, even though Indonesia wants to gain economic benefits, Indonesia must be able to overcome the impact of the Russia-Ukraine conflict with a strategic view into the future to mitigate potential obstacles.