Jakarta. Indonesia's plastics and petrochemical industry is urging the government to make its import duty exemption on liquefied petroleum gas (LPG) permanent, arguing that the measure would help manufacturers remain competitive as global raw material prices fluctuate.

The Indonesian Olefin, Aromatic and Plastics Industry Association (INAPLAS) said the temporary incentive, which reduced the import duty on LPG from 5% to zero for six months, is scheduled to expire in January 2027.

INAPLAS Chairman Suhar Miyarso presented the proposal to Industry Minister Muhammad Sarmuji during a meeting in Jakarta on Friday.

"We previously received an incentive that reduced the import duty on LPG feedstock from 5% to zero for six months, but it will expire in January," Suhar said.

"We have asked the minister to help extend or make the incentive permanent, similar to the treatment given to other industrial raw materials."

Suhar said maintaining the exemption would give petrochemical manufacturers greater flexibility to manage production costs and compete with overseas producers.

However, he acknowledged that the measure has yet to deliver a significant improvement in industry performance because imported LPG is not always cheaper than naphtha, another major raw material used in petrochemical production.

"At present, the cost of importing LPG and naphtha is almost the same. Sometimes LPG is even more expensive," he said.

Why LPG Prices Matter to Plastics Manufacturers
LPG and naphtha can both serve as feedstocks in petrochemical production, where they are processed into basic chemicals such as ethylene and propylene.

These chemicals are subsequently used to manufacture plastic resins and other materials that supply industries ranging from packaging and consumer goods to automotive manufacturing.

For petrochemical producers with suitable processing facilities, the ability to switch between LPG and naphtha can provide an important advantage when global energy prices change.

When LPG is cheaper, manufacturers can use it as an alternative feedstock to reduce production costs. When LPG prices rise, however, that advantage can disappear.

Suhar said the import duty exemption would become more effective if international LPG prices fell below those of naphtha.

"This policy will be highly effective if LPG prices become lower than naphtha prices again. That has happened before, and we want to keep this competitive feedstock option available so that we can take full advantage of it," he said.

A permanent exemption would not guarantee lower production costs at all times, but it could give producers greater flexibility in choosing the most economical raw materials.

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