Indonesia, a nation known for its vibrant democracy, is currently experiencing a period of heightened social and political unrest. Recent large-scale protests, sparked by public dissatisfaction over economic issues and social grievances, have had a notable impact on businesses and daily transactions across the country. While the government and authorities are working to restore order, it is crucial for businesses to understand the direct and indirect effects of these events and to have a plan to mitigate risks.
Check the latest insights on the ground and in-depth look at how the ongoing protests are affecting the business landscape, also some actionable tips for navigating these challenging times in this article.
The Direct and Indirect Impacts of the Protests on Businesses
The demonstrations have not only been a matter of public expression but have also created tangible disruptions for businesses. The impact can be categorized into several key areas:
- Operational and Logistical Disruptions: Protests often lead to road closures, public transport disruptions, and heightened security measures in key urban areas. This can directly affect:
- Supply Chains: The movement of goods and raw materials can be delayed, impacting production schedules and the delivery of products to consumers. For businesses that rely on a “just-in-time” inventory model, these disruptions can be particularly costly.
- Employee Mobility: Staff may find it difficult or unsafe to commute to work, leading to absenteeism and a slowdown in business operations. This has prompted many companies to shift to work-from-home models where possible.
- Retail and Service Industries: Businesses located near protest sites may be forced to close temporarily to ensure the safety of their staff and customers. Damaged public infrastructure, such as bus stations, can also make it difficult for customers to reach retail locations.
- Financial and Market Volatility: Social unrest, especially when it turns violent, can have a significant impact on investor sentiment and market stability.
- Currency Fluctuations: The Rupiah has experienced pressure, weakening against the US Dollar due to negative sentiment and capital outflows from foreign investors seeking safer havens. A weaker Rupiah increases the cost of imported raw materials and goods, putting a strain on businesses that depend on them.
- Stock Market Performance: The Jakarta Composite Index (JCI) has shown volatility, as investors react to the political uncertainty. While officials remain optimistic about a quick recovery, the short-term swings can be a concern for businesses and investors alike.
- Shifting Consumer Behavior: The protests, combined with underlying economic concerns, have influenced how people spend their money. Consumers may become more cautious, prioritizing essential goods and services. However, a phenomenon known as the “lipstick effect” is also observed, where people continue to spend on small, emotionally satisfying items to cope with stress, which can create opportunities for certain businesses.
- Damage to Property and Infrastructure: In some cases, protests have escalated into violence, leading to damage to public and private property. This can result in significant financial losses for businesses whose assets are targeted or located in areas of conflict.
How Businesses Can Handle the Situation
Navigating this period of unrest requires a strategic and calm approach. Here are some actionable tips for businesses to ensure continuity and resilience:
- Prioritize Safety and Communication:
- Employee Safety First: Your primary responsibility is the well-being of your staff. Implement a flexible work-from-home policy, if feasible. For essential on-site staff, monitor the situation and provide clear, real-time guidance on safe routes and avoiding protest areas.
- Stay Informed: Monitor official government advisories, police statements, and reputable local news sources to get accurate, real-time updates. Avoid spreading unverified information, which can create unnecessary panic.
- Maintain Clear Communication: Keep your customers and stakeholders informed about any operational changes, such as temporary closures or delays in service. A transparent and proactive communication strategy builds trust and manages expectations.
- Ensure Business Continuity and Operational Resilience:
- Diversify Your Supply Chain: If your business is heavily reliant on a single supply chain, consider diversifying to include local suppliers. This can help mitigate the risk of disruption caused by a national or city-wide event.
- Optimize Logistics: Work with your logistics partners to identify alternative delivery routes and schedules to circumvent protest-affected areas. If necessary, consider a decentralized hub-and-spoke model to minimize the impact of localized disruptions.
- Revisit Your Financial Strategy: Be prepared for potential currency fluctuations. Hedging or forward contracts can help to manage foreign exchange risks. Review your cash flow and liquidity, and consider securing a line of credit as a safety net.
- Adapt Your Marketing and Sales Strategies:
- Emphasize Value and Utility: In a period of economic and social uncertainty, consumers are more likely to seek value. Adjust your messaging to focus on the practicality, durability, and essential nature of your products or services.
- Boost Your Online Presence: With physical movement restricted, a strong digital presence is more important than ever. Ensure your e-commerce platform is robust and your social media channels are active. Use SEO to make your online store easily discoverable by customers searching for your products or services.
- Show Empathy and Community Support: Acknowledge the current situation and communicate with empathy. Look for opportunities to support your community in a meaningful way, which can strengthen brand loyalty and reputation.
- Strengthen Your Relationships:
- Engage with Stakeholders: Maintain open communication with your suppliers, partners, and financial institutions. A collaborative approach can help you find solutions to shared challenges.
- Build Strong Government and Regulatory Relationships: Stay informed about any government measures or policies being implemented to address the situation. Building a good relationship with local authorities can be beneficial in times of crisis.
The current protests in Indonesia are a stark reminder that businesses must be prepared for a variety of challenges, both economic and social. While they pose a significant test, they also offer an opportunity for businesses to demonstrate their adaptability, resilience, and commitment to their employees and communities. By prioritizing safety, ensuring operational continuity, and adapting to the evolving landscape, businesses can navigate this period of uncertainty and emerge stronger on the other side.
Sources:
- https://en.antaranews.com/news/377189/indonesia-back-to-normal-after-days-of-unrest-in-jakarta-police
- https://www.umy.ac.id/en/demo-dpr-picu-sentimen-negatif-rupiah-anjlok-ke-rp16-490-per-dolar-as/
- https://www.eco-business.com/news/indonesia-rocked-by-protests-linked-to-growing-inequality/
- https://www.pbs.org/newshour/world/what-to-know-about-indonesias-deadly-nationwide-unrest-over-lawmakers-perks
- https://www.speyside-group.com/news-insights/indonesias-protests-implications-for-governance-and-business
