Indef: Strengthening domestic market key to boosting petrochemical industry

Jakarta (ANTARA) - Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti assessed that strengthening the domestic market is a strategic step to propel Indonesia into becoming a key player in the global petrochemical industry. Contacted in Jakarta on Tuesday, she conveyed that mastering the domestic market will provide a strong foundation for the national industry before expanding its penetration into export markets. Esther explained that the government needs to prioritise the development and strengthening of a petrochemical industry oriented towards domestic needs. This step is considered important for building efficient production capacity while creating a competitive economic scale. “In my opinion, focus on the domestic market first, then it will be easier to master the export market. Because from the domestic market, we learn about economic scale,” said Esther. Previously, various efforts to strengthen the national petrochemical industry have been undertaken by the government. The Ministry of Industry (Kemenperin), for example, is seeking to include the petrochemical industry in the National Strategic Projects (PSN). This is being done considering the sector’s fundamental role as the main supplier of raw materials for plastics, synthetic fibres, synthetic rubber, functional chemicals, and various other industrial needs. The government has also exempted import duties on liquefied petroleum gas (LPG) for the petrochemical industry and plastic raw materials as part of the economic stimulus package for the second half of 2026. Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the policy was adopted to reduce production costs and help industry players obtain alternative raw material supplies to replace naphtha amidst global uncertainty. “The President’s directive, given the uncertain situation, is for the government to provide incentives for the import of LPG and plastic raw materials. So, the government has set a 0 percent import duty for LPG imports for the petrochemical industry,” said Airlangga during a press conference in Jakarta on Monday (22/6). The government hopes this policy can provide economic benefits of up to Rp2.25 trillion through reduced production costs in related sectors. “With this (0 percent import duty), it is hoped that the benefit value for the economic sector can increase by Rp2.25 trillion in the form of cost reductions for related industries and a multiplier effect that can be driven,” he said.