Plastic Price Surge Exceeds Normal Fluctuations: Apindo's Recommendations for the Government

The Indonesian Employers’ Association (Apindo) views the current rise in plastic prices felt by businesses as an impact of increasingly complex global dynamics, particularly geopolitical tensions disrupting the world’s energy supply chains. Apindo General Chair Shinta Widjaja Kamdani explained that disruptions to strategic routes, such as the Strait of Hormuz, have triggered increases in crude oil and naphtha prices as the main raw materials for global petrochemicals, surges in logistics costs (freight, insurance, and delivery times/laycan), and global shortages of raw materials. “This situation is driving up plastic resin prices and exerting direct and significant pressure on business operating costs, especially in sectors heavily dependent on packaging such as food and beverages, FMCG, pharmaceuticals, logistics, and retail,” Shinta said when contacted on Monday (6/4). Apindo sees that the rise in plastic raw material prices has exceeded normal fluctuation patterns, with increases of more than 100% in some cases. This condition, Shinta said, could persist, with very limited supply conditions. “Given that plastic components can account for 20–40% of the cost of goods, and even up to 50–80% for certain products, this surge directly pushes up overall production costs,” she explained. In this situation, businesses are in a very challenging position. On one hand, they must keep prices affordable for consumers to maintain public purchasing power. On the other hand, cost increase pressures continue to rise significantly. “For SMEs and sectors with thin margins, this pressure is already eroding profitability and could disrupt business sustainability if it persists in the long term,” she stated. In the short term, Shinta said the government needs to ensure the availability of raw materials and energy at competitive prices, especially for priority industrial sectors. This includes maintaining supplies of gas and electricity and smoothing access to raw materials that are currently very tight. “At the same time, the government can refer to practices in other countries like Thailand in maintaining plastic raw material price stability (the government controls plastic price increases so as not to burden consumers), and strengthen oversight of the supply chain. This is to ensure that pricing mechanisms remain reasonable and do not burden industry or consumers, including anticipating potential distortions or speculation in plastic prices,” she revealed. As a priority step, the government is also seen as needing to encourage the implementation of a circular economy through policies that mandate the gradual and measured use of recycled raw materials in packaging. According to her, this policy needs to be accompanied by clear incentives for businesses using recycled materials, as well as support for investments in the recycling industry that can create a closed-loop system. “This approach is important not only from an environmental perspective but also as a solution to reduce pressure on plastic raw material supplies and import dependency,” Shinta said. “In addition, fiscal support and adaptive policies are important, including temporary relaxations for affected industries, and caution in adding new regulatory burdens amid high global pressures,” she added. Looking ahead, Shinta said this momentum should also be used to reduce import dependency by accelerating the strengthening of the domestic petrochemical industry, including encouraging investments in technology and more stable alternative raw material sources. For example, condensed LPG, bio-based feedstocks, and other options. “While maintaining a balance between protecting domestic industry and competitiveness. With an integrated approach between short-term stabilisation and long-term transformation, Indonesia can strengthen its industrial resilience while reducing the impact of global volatility on businesses and the workforce,” she concluded.