Indonesia Monitors Hormuz Tensions, Secures Plastic Supply

RRI.CO.ID, Jakarta - The Ministry of Industry continues to monitor global geopolitical dynamics, including developments in the Strait of Hormuz, which have the potential to affect the supply chain of petrochemical raw materials and the national plastics subsector. To anticipate these impacts, the ministry has brought together stakeholders from upstream petrochemical industries, intermediate industries, downstream industries, and plastic recycling industries to discuss current conditions and joint mitigation measures.

Minister of Industry, Agus Gumiwang Kartasasmita, stated that the meeting revealed industry optimism regarding domestic plastic stock availability. “From the meeting, we received assurance from industry players that plastic stock should not be a problem. I underline the word ‘should,’ because the government will continue to closely monitor global developments that may affect production and stock in this subsector,” Agus said.

In addition, industry participants expressed their commitment to maintaining the continuity of plastic supply, particularly for small-scale industries, so their products can remain competitive in the market.

The Ministry also understands that geopolitical tensions in the Strait of Hormuz have caused distortions in the domestic price structure of plastic products. Price adjustments may occur due to increased logistics and port freight costs, the imposition of premium surcharges, and disruptions in the delivery time of imported raw materials. “Delivery time, which previously averaged around 15 days, can now extend up to 50 days. This condition certainly impacts the increase in production costs,” the minister said.

Furthermore, the Minister emphasized that the current global situation serves as an important lesson learned to further strengthen the independence of the national petrochemical industry, especially in terms of domestic raw material supply. “This situation further confirms the importance of building a strong and independent national petrochemical industry, so that dependence on imported raw materials can continue to be reduced,” he said.

The meeting also revealed that investors expect the petrochemical subsector to become more attractive for new investments. One key factor that needs to be strengthened is the protection of the domestic market from the influx of imported products.

The government, the Minister added, will continue to ensure the fulfillment of national raw material needs while maintaining a balance between the energy sector, including fuel for vehicles, and the petrochemical industry.

The discussion also highlighted the potential development of alternative raw materials to substitute naphtha from domestic sources, including crude palm oil (CPO). Although currently less competitive in terms of price, this option is considered worth exploring as part of a diversification strategy to reduce dependence on imported raw materials.

“We must explore all potential national resources that can serve as alternative raw materials for the petrochemical industry, including CPO, although the economic feasibility still needs to be carefully calculated,” he said.

In closing, Agus emphasized that amid current geopolitical conditions, competition among countries to secure petrochemical raw materials is expected to intensify. Therefore, industry players have proposed ensuring access to raw materials that are not only high-quality but also capable of enhancing company and product competitiveness.

“The Ministry of Industry will continue to stand alongside industry players in maintaining the resilience of the national manufacturing sector in facing global dynamics,” he conveyed.