JAKARTA, June 4 (Xinhua) -- Depreciation of the rupiah has increasingly affected the real sector, prompting companies to delay expansion plans, curb non-essential spending, diversify markets, increase the use of local raw materials and strengthen currency hedging strategies, an Indonesian industrial organization said Thursday.

Indonesian businesses are implementing cost-cutting measures and freezing new hiring as the rupiah weakens beyond 18,000 against the U.S. dollar, said Shinta Kamdani, chairwoman of the Indonesian Employers Association (Apindo).

"The current challenge for businesses lies in the impact on production costs, financing and business certainty," Shinta said, noting that around 80 percent of Indonesia's raw materials are still imported.

She said the weaker rupiah has raised production costs, squeezed profit margins and reduced companies' ability to expand.

Industries heavily dependent on imported inputs, including textiles, chemicals, petrochemicals, plastics, basic metals, electronics and automotive manufacturing, have been among the most affected, she added.

Shinta also pointed to high logistics, energy and financing costs as additional burdens on businesses, while noting that manufacturing activity and business confidence have weakened in recent months.

She warned that the current depreciation is deeper than that seen in the first quarter of this year, when several manufacturing subsectors already recorded sluggish growth or contraction.