The Russian – Ukrainian War Also Have an Impacts on Indonesia


The recent war between Russia and Ukraine has also had an impact on Indonesia. The biggest impact from an economic perspective is the increase in the prices of several commodities.

Four impacts are felt by Indonesia based on the explanation of the Coordinating Minister for Economic Affairs Airlangga Hartarto. He explained that the first impact he felt was the soaring price of palm oil.

He said the price of palm oil rose from US$1,200 per tonne to US$1,700 per tonne or skyrocketed 40 percent.

“This (war) will greatly disrupt the supply of vegetable oil produced by Ukraine and Russia,” said Airlangga at the opening of the 2022 Police Rapim, Wednesday (2/3).

Furthermore, regarding the second impact, the increase in global crude oil prices to be in the range of US$100-US$120 per barrel. “Then the gas price rose to US$50,” he added.

This condition, according to Airlangga, will disrupt the energy supply chain throughout the world. For Indonesia, the price increase will have an effect because there is still oil and gas imported from Russia.

The increase in world crude oil prices has triggered an increase in Indonesian crude oil prices or the Indonesian Crude Price (ICP). The provisional development of the ICP for February 2022 as of the 24th was recorded at US$ 95.45 per barrel.

With the ICP price rising, of course, there is a big gap between the ICP assumption in the 2022 State Budget which is only US$ 63 per barrel.

It is noted that the increase in ICP causes the economic price of fuel to increase. Each increase of US$ 1 per barrel has an impact on an increase in LPG subsidies of around Rp. 1.47 trillion, kerosene subsidies of around Rp. 49 billion, and fuel compensation expenses of more than Rp. 2.65 trillion.

As is known, subsidies for BBM and 3 kg LPG in the 2022 State Budget are Rp. 77.5 trillion. The subsidy at the time of the ICP was US$ 63 per barrel.

In addition, the increase in ICP also has an impact on electricity subsidies and compensation, considering that there is still the use of fuel in power plants. Every increase in ICP of US$ 1 per barrel has an impact on additional subsidies and electricity compensation of Rp. 295 billion.

Furthermore, the third impact is an increase in prices or supply for wheat and cereals which were previously supplied by Ukraine.

The final impact is that Indonesia must look for import substitution countries or temporary export recipients due to the freezing of Russia’s access to SWIFT, the largest payment system network in the world.

Airlangga detailed that Indonesia’s import dependence on Russia is iron or steel products, fertilizers, mineral fuels, aircraft components, weapons, and ammunition, to salt and sulfur.

Meanwhile, Indonesia’s largest exports to Russia are vegetable oil, coffee and tea, footwear, electrical equipment, rubber, and machinery.

Furthermore, Ukraine’s biggest imports to Indonesia are cereal grains, steel, and sugar. Meanwhile, Indonesia’s biggest exports to Ukraine are vegetable oil, paper, and footwear.