Ministry of Industry: Exemption of LPG Import Duties is Good News for Petrochemical Industry
Jakarta (ANTARA) - The Ministry of Industry (Kemenperin) has positively welcomed the decision to exempt import duties on LPG and considers this step to be good news for the petrochemical industry in the country.
“In principle, it is good news for the upstream petrochemical industry, with the reduction in import duties on LPG,” said Kemenperin Spokesperson Febri Hendri Antoni Arif in Jakarta on Wednesday.
He stated that the policy’s objective is to meet the national plastic raw material needs. Additionally, he emphasised that Kemenperin has a strong commitment to maintaining industrial balance, from upstream, midstream, to downstream.
“What is important for us is to maintain the balance of upstream, midstream, and downstream industries,” he said.
Director of Upstream Chemical Industry at Kemenperin, Wiwik Pudjiastuti, added that the government is providing relief in the form of exemption from import duty tariffs on LPG, previously 5%, now 0%, considering that this material is used not only as energy but also as a petrochemical raw material.
According to Wiwik, the exemption of import duties on LPG is also carried out as one of the anticipatory efforts against geopolitical dynamics, given that the petrochemical sector is one of the most affected.
She explained that the main raw material for the petrochemical industry is naphtha, which largely comes from the Middle East, particularly Saudi Arabia, the United Arab Emirates, and Qatar.
Wiwik added that nearly 90% of naphtha distribution passes through the Strait of Hormuz, so to meet industrial needs, the government still imports naphtha from that region. Meanwhile, petrochemical raw materials can come from three sources: naphtha, LPG, and condensate.
LPG itself is used as a blending material with a maximum proportion of 50%, so LPG blending is needed to support the petrochemical industry amid supply pressures on naphtha.
Previously, the government exempted import duties on liquefied petroleum gas (LPG) products from 5% to 0% as a step to support the petrochemical industry.
The policy is primarily aimed at helping the petrochemical industry, which is currently facing difficulties in obtaining naphtha raw materials due to the crisis in the Strait of Hormuz.
“Incentives for LPG, namely policy intervention in the form of reducing import duties, mainly for the petrochemical industry which, due to the conflict in the Strait of Hormuz, is experiencing difficulties in obtaining naphtha,” said Coordinating Minister for the Economy Airlangga Hartarto during a press conference in Jakarta on Tuesday (28/4).