Plastic Prices Rise, SMEs Opt to Cut Profits to Maintain Prices
JAKARTA, KOMPAS.com - Micro, small, and medium enterprises are choosing to hold their selling prices steady amid the increase in plastic prices. This step is taken to maintain public purchasing power.
Minister of SMEs Maman Abdurrahman stated that this decision impacts business margins. Profits are shrinking because production costs are rising.
“So, they keep the price the same, but in the end, their profits become thinner, because their production costs are going up due to the rise in plastic prices,” said Maman when met at the Smesco Indonesia Complex, Jakarta, on Thursday (9/4/2026).
The rise in plastic prices is triggered by disruptions in the supply of raw materials. Plastic is produced from naphtha, a petrochemical product based on crude oil.
Around 70 percent of the global naphtha supply comes from Gulf countries in West Asia. The supply is disrupted after the Strait of Hormuz was closed due to the Iran-Israel-US conflict.
This situation makes plastic raw materials scarce. Domestic industries are reducing production volumes.
“In the end, plastic in the market becomes scarce, right? When it’s scarce in the market, people compete for it. The public will compete to buy plastic, so prices become high,” said Maman.
The government is seeking short-term solutions. The Ministry of SMEs is coordinating with the Ministry of Trade to find new supply sources.
Naphtha is now being sourced from Africa, the United States, and India. These countries are not directly affected by the conflict.
“Now we have obtained it from Africa, India, and America. Now it’s in the process of administration, shipping, and so on. That’s the short-term measure,” said Maman.
One option is the use of seaweed as a base material for plastic. Production costs are deemed reducible if the market scale increases.
“From the previous naphtha, we shift to using seaweed; that actually can lower our operational costs or production costs. We can reduce them,” said Maman.
The rise in plastic prices started to be felt after Eid al-Fitr. Traders noted a significant surge in the past few weeks.
General Secretary of the Indonesian Market Traders Association Reynaldi Sarijowan stated that the increase reached 50 percent compared to before the conflict.
“Far before entering Ramadan, it was still 10,000. Then it gradually rose over a week, a week, a week, up Rp 500, up Rp 700, various increases until today, the peak is projected at 50 percent for us,” said Reynaldi when contacted by Kompas.com on Monday (6/4/2026).