Jakarta – Chemical engineering expert Panut Mulyono is calling for some government measures that can protect the Indonesian petrochemical industry from an influx of imported goods.
Finance Minister Sri Mulyani recently announced that the government would roll out anti-dumping and safeguard import duty measures against textile products amid massive layoffs in the industry. While such measures deserve praise, other sectors that are pivotal to the national industrial supply chain also need similar protection, according to Panut. And that includes the petrochemical industry.
The petrochemical industry encompasses plastic production across the value chain. Not only does it play a vital role in other sectors, the petrochemical industry generates job opportunities for many people. If unprotected, it would only spur layoffs and lead to de-industrialization, thus a fatal blow to the Indonesian economy, Panut said.
The upstream side of the petrochemical industry produces plastic raw materials that are eventually used for the production of packaging. This sector is currently undergoing immense pressure due to an influx of imported plastic raw materials sold at low prices. Indonesia's relaxation of imports with the 2024 Trade Ministry regulation has also taken a toll on the domestic petrochemical industry. As less local products get absorbed, it can take a toll on social welfare.
"Anti-dumping protection measures can help the petrochemical industry boost its production capacity to meet the domestic demand," Panut said, adding that they could make the country depend less on imported raw materials.
"If there is no improvement, the prospects for the upstream petrochemical industry will become increasingly bleak. We will also struggle to provide job opportunities for the younger generation," Panut said.
The Indonesian Olefin, Aromatic and Plastic Industry Association (Inaplas) blamed the influx of imported plastic raw materials on China's oversupply. China has 23 petrochemical projects that can produce a total of 50 million tons of the plastic raw material ethylene. This has resulted in the country having an excess of petrochemical products. The huge imports in the upstream petrochemical industry have also caused the production costs to be more expensive than imported plastic raw materials.
The Indonesian Anti-Dumping Committee (Kadi) has investigated 10 cases in 2023-2024, although they still remain under investigation. Those 10 cases are as follows: Ceramic Tiles, Sunset Review Frit, Nylon Film, Sunset Review III Hot Rolled Plate (HRP), Polypropylene Copolymer, Synthetic Filament Yarn, Sunset Review II Tinplate, Sunset Review III H Section and I Section, Sunset Review III Hot Rolled Steel Sheet and Coil (HRC/Hot Rolled Coil) and Sunset Review and Interim Review of Biaxially Oriented Polypropylene (BOPP).