Indonesia's Petrochemical Industry Begins to Feel Pressure, Ministry of Industry Identifies These Symptoms
Jakarta, CNBC Indonesia - The Ministry of Industry (Kemenperin) acknowledges pressures on the domestic industrial supply chain due to the energy logistics crisis in the Middle East. These impacts are beginning to be felt in upstream industries that still depend on raw material supplies imported from that region.
Spokesperson for the Ministry of Industry, Febri Hendri Antoni Arief, revealed that supply disruptions have not yet halted production activities, but they have already triggered price adjustments in the market.
“Clearly, for raw materials in upstream industries that rely on supplies from the Middle East, there is indeed some delay. Up to now, the same industries are still producing using available raw materials and will continue to produce,” he stated, quoted on Wednesday (1/4/2026).
Amid these conditions, industry players are starting to face price dynamics, particularly in petrochemical derivative products that serve as key components in various sectors.
“Well, in the field, we see price increases in certain products. And we see that as an effort by the market to adjust prices for derivative products from raw materials originating from the Middle East,” he explained.
Petrochemical products such as olefins and plastics play a strategic role because they serve as raw materials across sectors, from automotive to the food and beverage industry. This situation means disruptions upstream could potentially spread to downstream sectors.
“If it’s petrochemical products, for example, olefins, plastics, yes, they are widely used by other industrial subsectors. For instance, the plastics industry in automotive, packaging in the beverage industry, food industry, or others, yes, they are used,” he said.
Nevertheless, the Ministry of Industry assesses that the current crisis impacts are still limited and have not spread to all industrial sectors.
“The impact of the energy logistics crisis in the Middle East on industry is still limited in nature to certain industrial subsectors,” Febri emphasised.
Looking ahead, the government hopes the global situation will improve soon so that pressures on the national industry do not intensify. However, at the same time, industry players are urged to prepare for potential cost increases, particularly in energy and logistics.
“We advise carrying out energy efficiency in the production process or in supporting industrial activities. Energy efficiency in the production process does not reduce the planned production targets,” he said.
Additionally, industry players are reminded to anticipate rising logistics costs that could affect competitiveness.
“One thing that industry needs to pay attention to going forward is the increase in logistics costs, both for export logistics and the purchase of imported raw materials,” he added.
The Ministry of Industry also acknowledges that energy cost pressures could potentially affect overall industrial performance, including key manufacturing sector indicators.
“Whenever there is an increase in energy costs, it will pressure industrial performance, both in terms of the IKI value for subsequent months and the PMI value,” Febri revealed.
In facing this situation, the government emphasises the importance of strengthening the resilience of the national industry through long-term strategies, including reducing dependence on imported raw materials.
“The import substitution programme continues to be promoted, with the main goal of increasing industrial resilience in facing crises and also strengthening domestic industrial independence,” he concluded.