Indonesia's Petrochemical Deficit and the Stalled RIPIN Execution

The chemical industry’s products serve as raw materials for various other industrial processes, forming the backbone of industrialisation and contributing significantly to the global and Indonesian economies. Strengthening the national petrochemical industry is crucial because Indonesia remains dependent on imports, which contributes to the trade deficit. Every year, more than 11 billion US dollars (2025 data) flows out of the country, not for investment or technology transfer, but to purchase petrochemical products that should be producible domestically. This reality directly impacts the price of mobile phones used by the public, food packaging consumed, vehicle dashboard components, and even school uniform materials. All these products use petrochemical raw materials, and 70% of them are still imported. Despite its abundant natural resources, Indonesia still acts as a market rather than a key player in its own industry.

A closer look at the data reveals that domestic petrochemical production capacity is currently only 5.14 million tonnes per year, with high utilisation rates between 90% and 95%. Meanwhile, national demand continues to grow, leaving an annual supply shortage of 10.5 million tonnes. This gap is filled by imports worth 11 billion US dollars (2025), equivalent to more than Rp187 trillion. The import breakdown includes upstream products like Ethylene and Methanol, intermediate products, and downstream products such as polyethylene and polypropylene, which have the highest added value. The data shows that imports are largest for downstream products, followed by upstream, with intermediate being the lowest. Alarmingly, 70% of downstream petrochemical needs are still fully dependent on foreign suppliers, illustrating the depth of the structural deficit. Serious development of the downstream industry would create a positive chain effect, necessitating the construction of upstream and intermediate industries domestically to ensure stable and competitive supply.

The government actually has a master plan, the National Industrial Development Plan (RIPIN) 2015-2035, which explicitly designates the petrochemical industry as a priority sector. The document was collectively drafted by the Ministry of Industry, state-owned enterprises, business associations, and universities, setting ambitious targets for reducing import dependency and building integrated petrochemical clusters. However, nearly a decade later, implementation has not been significantly felt. Each institution tends to operate independently with its own roadmap, leading to overlapping or contradictory efforts—a phenomenon industry players call the ‘silo’ effect. The root problem is not the RIPIN content but its implementation governance. There is no binding monitoring mechanism or regular evaluation involving all stakeholders. Consequently, even the best plan cannot yield change without disciplined collective execution. The solution is not to draft a new plan but to revive RIPIN as a single binding reference for all parties, establish a periodic evaluation mechanism, and form a cross-ministerial implementation team with clear authority and responsibility.