Indonesia slashes plastic import duties to 0% for six months as naphtha shortage drives prices up 100%

INDONESIA – Indonesia has announced plans to remove import duties on polypropylene, LLDPE, and HDPE, materials used to make plastic packaging, as well as on LPG for the petrochemical industry, reducing duties from between 5 and 15% to 0% for six months starting in May, following a 50 to 100% surge in domestic plastic prices due to naphtha supply disruptions from the Middle East.

Coordinating Minister for Economic Affairs Airlangga Hartarto explained that domestic prices for plastic have risen between 50 to 100% because of disruptions in naphtha supply imported from the Middle East caused by the ongoing war. 

The measure could have knock-on effects on other prices because it affects the supply of plastics used for packaging.

Temporary Relief for Packaging Producers

The duty on LPG imported by the petrochemical industry will also be cut to 0% from 5%. The government will reassess the situation after six months. 

The temporary nature of the relief reflects uncertainty about how long the supply disruption will last, a six-month window suggests policymakers hope for de-escalation or alternative supply routes before the end of 2026.

Why Naphtha Matters for Packaging

Naphtha is a petrochemical feedstock used to produce basic plastics such as polyethylene and polypropylene. 

When naphtha supply tightens, resin prices rise, and those increases cascade through the packaging value chain. 

For Indonesia, a country with a rapidly growing packaged food and beverage sector, higher plastic packaging costs translate directly into higher prices for consumer goods. 

Airlangga noted that the measure is intended to dampen the increases in the prices of plastics and other products, such as food and drinks packaged in plastic.

The Scope of the Duty Cut

Indonesia currently applies import duties of between 5 and 15% on plastic products. 

By reducing those duties to zero for six months, the government reduces the landed cost of imported polypropylene, LLDPE, and HDPE, key materials for flexible and rigid packaging.

For packaging converters, the duty cut provides breathing room: imported resin will cost less, allowing them to maintain margins or hold down prices for food and beverage customers. For consumer goods companies, the measure should slow the pass-through of resin price increases to retail shelves.

When a War 8,000 Kilometres Away Raises Instant Noodle Prices

The plastic wrapper on a bowl of instant noodles seems far removed from the Strait of Hormuz. 

But the naphtha that travels through that strait becomes the plastic in the wrapper. Indonesia’s 50 to 100% plastic price spike shows the chain of transmission. The six-month duty cut is not a solution, it is a buffer.

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