Indonesia Secures Naphtha Supply from India, Africa, and the US

Minister for Micro, Small, and Medium Enterprises (MSMEs) Maman Abdurrahman stated that Indonesia has secured commitments for naphtha supplies—plastic raw materials—from India, Africa, and the United States amid disruptions in supplies from the Middle East region. Maman said that these efforts represent short-term measures to stabilise domestic industry needs. “We have already obtained supplies from Africa, India, and America. Currently, administrative processes are underway,” Maman said during a media gathering in Jakarta on Thursday. “The Ministry of Trade is following up to secure naphtha supplies from Africa, India, and America,” he added. In addition to securing supplies, Maman said the government is also preparing long-term strategies to reduce reliance on naphtha. These strategies include diversifying plastic raw materials by utilising biomaterials such as seaweed and cassava. According to him, seaweed has been researched as an alternative raw material for plastic bags, although production costs remain relatively high due to a limited market. The government has also indicated plans to collaborate with small and medium enterprises (SMEs) already engaged in producing seaweed-based plastics. These efforts are expected to expand production capacity while reducing costs through larger industrial scales. Maman added that if policies to substitute plastic raw materials from naphtha to seaweed can be promoted, operational and production costs have the potential to decrease. Currently, the government is conducting discussions and negotiations with several SMEs that have produced seaweed-based plastics. Domestic plastic prices have reportedly surged between 30 and 80 percent following the escalation of conflicts in the Middle East involving the United States-Israel and Iran. Disruptions in naphtha distribution, a petroleum derivative, as well as surges in global oil prices, are cited as the main triggers for the increase. According to data from Independent Commodity Intelligence Services (ICIS), naphtha exports from the Middle East reach millions of tonnes per year, with Saudi Arabia and Oman as the main suppliers. Saudi Arabia exports around 3.6 million tonnes of naphtha per year, while Oman exports around 2.7 million tonnes per year. Additionally, nearly 4 million tonnes of naphtha pass through the Strait of Hormuz to Asia every month.