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RI tire industry expects production to decline this year amid uncertainty
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A man piles tires up on the side of a road in Gunung Putri, Bogor, West Java, on Tuesday. The tires were rejected products that the manufacturer had meant to sell to used tire collectors. They were cut in half to prevent them from being misused. (The Jakarta Post/P.J. Leo)
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ndonesian tire businesses are struggling to maintain their performance amid a persistently weak rupiah and a surge in energy prices partly resulting from conflict in the Middle East.
Indonesian Tire Entrepreneurs Association (APBI) head Aziz Pane said on Thursday that the strong United States dollar had significantly impacted tire production costs, prompting businesses to consider suspending production and assessing their long-term viability.
Indonesia’s largest tire export market is the Middle East, and producers have seen shipments to the region decline, he said, adding that firms had been scrambling to find new markets.
“The effect of these price surges is having a real impact on production costs, supply chains and the export market. I mean, can we achieve the same results as last year?” Aziz said, as quoted by Bisnis.
Read also: Mideast escalation could hurt Indonesia's economy
One US dollar equaled Rp 15,865 as of this Friday, according to Bank Indonesia. The rupiah has weakened significantly from its position in late January, when it hovered below Rp 15,000 per US dollar.
Meanwhile, crude oil prices continued to rise on Wednesday on worries about supplies in the event of a wider war in the oil-rich Middle East, with some observers even warning the commodity could head toward US$150 a barrel, AFP reported.
