Facing the Impact of Rising Plastic Prices on SMEs, This is the Government's Strategy
Minister for Micro, Small, and Medium Enterprises (SMEs) Maman Abdurrahman stated that the government is preparing a comprehensive strategy to address the surge in plastic prices. The increase in the price of this component has directly impacted the sustainability of SME businesses, particularly in the food and beverage sector.
Maman explained that Indonesia’s dependence on imports of plastic raw materials remains high, at 55%. Of this amount, around 70% of the raw material distribution passes through the Strait of Hormuz, which is currently affected by geopolitical conflicts, thus disrupting the global supply chain.
“Naphtha, the main raw material for plastic, mostly comes from Middle Eastern countries. This geopolitical conflict situation is hindering naphtha distribution and driving a significant rise in plastic prices,” said Maman in Jakarta on Thursday (9/4).
Data from the Indonesian Food and Beverage Producers Association in 2026 shows that naphtha shortages have reduced plastic production capacity, even causing some production lines to halt. This has automatically impacted retail plastic prices, which have risen sharply, pressuring SME performance with turnover declines of up to 50%. Meanwhile, the majority of food and beverage SMEs still rely on plastic packaging.
The domestic plastic packaging industry itself dominates the market at 67.61% in 2025, with the food sector as the largest contributor. Facing this situation, the government, together with the Ministry of Trade, is preparing short-term and long-term measures.
For the short term, the government is opening alternative naphtha supplies from relatively stable regions such as Africa, India, and the Americas. Administrative processes are being prepared so that raw material distribution can proceed immediately.
Furthermore, this situation presents a strategic opportunity to evaluate dependence on imports from high-risk areas, while strengthening national industry resilience through diversification of raw material sources.
On the other hand, the government is also promoting a transformation towards the use of more environmentally friendly alternative raw materials based on domestic resources. Several materials such as bamboo, seaweed, and cassava are considered to have great potential to be processed into bioplastics as an alternative packaging replacing naphtha.
“This is not only a solution to the supply crisis but also an opportunity to build a green industry based on local potential,” said Maman.
He added that seaweed and cassava, which are abundant in Indonesia, have actually been utilised as alternative plastic raw materials. However, market limitations have kept production costs relatively high.
Several SMEs have also begun producing seaweed-based plastic, even penetrating export markets. The government is committed to strengthening support for such initiatives to increase production scale and meet domestic needs.
“If policies are directed towards strengthening the substitution of naphtha raw materials with seaweed, demand will grow and production costs can be reduced,” said Maman.
In addition, the development of alternative raw materials also opens up new business opportunities for SMEs, while strengthening the industrial ecosystem based on local resources. The Ministry of SMEs continues to coordinate with related ministries, institutions, and regional governments to formulate sustainable strategic steps in maintaining the stability of the national plastic raw material supply chain.
The government is also reviewing various supporting policies, including subsidies for bioplastic use, strengthening shared packaging facilities, implementing principles of reducing plastic use, as well as training and assistance to encourage environmentally friendly lifestyles.
On the other hand, the public is urged to play an active role by reducing plastic use and increasing recycling practices as part of collective efforts to preserve the environment while reducing dependence on imported raw materials.
This increase in capital costs not only erodes profit margins but also potentially disrupts business continuity amid declining consumer purchasing power.
SMEs in Cianjur Regency, West Java, are feeling the impact of rising plastic prices. The increase of 80-100% has directly affected production costs.
Food and beverage business operators are facing pressure due to rising plastic packaging prices triggered by global situations, including conflicts in the Gulf region.
Experiencing a significant price increase, plastic traders have seen a substantial decline in turnover.
The recent rise in plastic prices serves as an indicator of increasing pressure on the global raw material supply chain.