Sumatra Flood and Its Effect on Business in The Area
GOI mentioned that it would take around 51.82 trillion rupiah ($3.11 billion) for the reconstruction and recovery caused by the flooding and landslides across Sumatra and other parts Asia. President Prabowo has not declared a national emergency over the severe disaster, though he has announced reconstruction plans. Moreover, Finance Minister, Purbaya Yudhi Sadewa, confirmed that the disaster will not significantly affect Indonesia’s Gross Domestic Product (GDP), and still expects it to grow more than 5.5 percent year-on-year in the final quarter.
Environmental organizations attribute the flood damage to deforestation caused by mining and logging. The Environment Minister, Hanif Nurofiq, disclosed causes of the floods including the environmental pressures in Batang Toru Watershed from large-scale plantation forestry, hydropower projects, and gold mining activities. Approximately 1.4 million hectares of forest were cleared in Aceh, North Sumatra, and West Sumatra between 2016 and 2025, linked to activities by 631 companies holding permits. The Ministry of Energy and Mineral Resources stated that 23 mining licenses are situated in affected regions.
This month, the government temporarily halted the operations of only four companies including a gold company, state-owned plantation, independent hydro power producer, and palm oil company. Further follow-up actions that will affect the businesses in the area including stricter environmental and spatial planning compliance, especially for all activities on steep slopes, upstream watersheds, and river channels, with law enforcement measures planned for any violations that increase disaster risks.
