Industrial LPG Imports Now Exempt from Import Duties, Will State Revenue Decline?

Jakarta, CNBC Indonesia - Coordinating Minister for the Economy Airlangga Hartarto has revealed that the exemption of import duties on liquefied petroleum gas (LPG) imports for industrial use, as a substitute raw material for plastic ore from naphtha, will not disrupt state revenues.

The reason is that Indonesian industries have never imported LPG as a raw material, even though the government has set an import duty tariff of 5%.

“That’s for refineries, there’s no import, zero. So actually, it’s zero, imports are nil tonnes. But because naphtha is now unavailable, production has dropped, so the alternative is to use LPG,” said Airlangga at his office in Jakarta on Tuesday (28/4/2026).

Therefore, since there have been no industrial LPG imports entering Indonesia to date, there has been no revenue from the 5% duty. Consequently, he emphasised that the current policy of exempting import duties on LPG will not affect state revenues in the 2026 state budget.

“The revenue has been zero all this time because there are no imports. So from zero to zero, the potential loss is zero minus zero equals zero,” Airlangga stressed.

He also explained the reason behind this policy, which will soon take effect, to anticipate rising plastic prices due to disrupted global supplies. According to him, industry players have already reported that the domestic plastic raw material situation is critical or in a state of force majeure, thus requiring a substitute like LPG.

The industry players who have reported this, according to Airlangga, include PT Chandra Asri Pacific Tbk. Additionally, PT Lotte Chemical Indonesia stated that plastic raw materials are dwindling due to the war in the Middle East.

“Some are saying it’s dangerous, one has already declared force majeure. Now, if the raw materials can’t be obtained, what then? Food and beverages all need packaging,” Airlangga explained.