Packaging Industry Players Hold Back Expansion Amid Cost Pressures, Focus on Efficiency
Packaging industry players are choosing to hold back production capacity expansion in the second half of 2026 amid uncertainty over raw material prices, weakening public purchasing power, and the increasing burden of compliance with environmental regulations.
Indonesian Packaging Federation (IPF) Director Henky Wibawa said the majority of companies are currently shifting their focus from adding capacity to strengthening cost efficiency and adjusting production volumes to remain aligned with market demand.
“The considerations are the uncertainty of raw material prices, the risk of weakening consumer purchasing power, and environmental regulatory compliance obligations that add costs,” he told Bisnis on Saturday (11/7/2026).
According to Henky, this decision was taken even though the outlook for the packaging industry in 2026 still shows positive growth. The market value of the packaging industry is projected to increase by around 5%-6% annually.
He said this growth is more moderate compared to the beginning of the year due to cost pressures, but remains positive thanks to the boost from consumption and investment.
He mentioned that demand for packaging is currently still supported by strong household consumption, which accounts for more than half of gross domestic product (GDP). In addition, the growth of e-commerce and the implementation of a national food programme with a target of providing around 190 million meal portions per day are also driving the need for packaging, particularly for the food and beverage sector.
Nevertheless, the industry is still overshadowed by the impact of the surge in raw material prices that occurred recently. Henky explained that the global naphtha supply crisis had triggered an increase in plastic resin prices of up to 200%.
Although prices have now begun to correct, the inflationary effect on production costs is still being felt by businesses. According to him, this cost pressure has impacted people’s purchasing power, making demand more selective.
At the same time, industry players must also adapt to the implementation of Extended Producer Responsibility (EPR) regulations and policies to reduce single-use plastics, which require additional investment.
Under these conditions, Henky estimates that the production capacity utilisation rate of the packaging industry in the second half of 2026 will tend to stagnate or only increase slightly if government stimulus policies succeed in reducing input costs.
“The company’s focus is to keep utilisation stable while avoiding overproduction,” he stated.
To maintain the industry’s competitiveness, IPF is urging the government to provide support through the stabilisation of energy and raw material prices. In addition, investment incentives for the development of recycling technology and environmentally friendly packaging are considered increasingly urgent.
Henky also stressed the importance of regulatory certainty regarding EPR so that businesses can formulate long-term investment plans in a more measured manner. “And logistical infrastructure support to strengthen the domestic supply chain,” he concluded.