Jakarta. Indonesia has set a zero percent import duty on plastic inputs and liquefied petroleum gas or LPG for the petrochemical industry, as the country tries to cushion the impact of the Iran war on its economy.

The tariff removal is part of the government’s economic stimulus package for the remainder of 2026. This package totals roughly Rp 26.34 trillion ($1.5 billion) in value. 

To the press, senior minister Airlangga Hartarto revealed that the duty exemptions on LPG imports could spur economic benefits worth Rp 2.25 trillion or roughly $126.1 million.

According to his presentation slides, Indonesia would “only” lose Rp 360 billion (almost $20.2 million) in state revenue each year from letting LPG flow into the country’s petrochemical sector duty-free, a tiny fraction of the economic boons.

“We hope the zero import duty will address the supply disruption in the petrochemical industry. LPG is a substitute feedstock in the early stage of its supply chain,” Airlangga said in Jakarta on Monday.

Indonesia unveiled the 0% import duty on LPG and plastic imports in April, about two months into the US-Iran war. This special treatment is in effect for six months.

The move largely aimed to give petrochemical firms an alternative to naphtha, a key plastic ingredient that has been facing shortages following Iran’s de facto closure of the Strait of Hormuz. This narrow waterway acts as a key maritime corridor for the naphtha.

The latest announcement is set to calm worries among food and beverage (F&B) businesses. 

“Price fluctuations have also taken a toll on the F&B industry. They use plastic for packaging. That's why we are giving the 0% import duty on plastic input,” the minister told reporters.

“Things will hopefully return to normal as we keep an eye on the inflation.”

Despite the recent US-Iran peace deal talks in Switzerland, Airlangga signaled that Indonesia would not let its guard down.

“There is a glimmer of hope [in regards to the Middle East conflict], ... but we must take proactive measures to prevent and anticipate the possible external risks," he explained. 

Estimates by the Indonesian plastic industry association Inaplas show that the annual naphtha demand reaches 3 million tons each year, all of which are coming from overseas.

Indonesia mainly sources its naphtha from the Middle East. Nearly half of the plastic inputs, such as polyethylene, are also imported.

The national statistics body BPS names China, Singapore, and Thailand as the main suppliers of plastic raw materials.

Add as a preferred source on Google +