Steaming up Indonesia’s Petrochemical Industry
- Petrochemical products had been the most significant contributor to imports, among other supporting products with increasing values since 2015. The imports of plastics and its derivatives reached US$ 9.2 billion in 2018, UNComtrade data shows.
- The government will have an essential role in petrochemical industry development through Pertamina and Tuban Petro, in line with the issuance of Government Regulation on Tuban Petro’s debt to equity swap, in addition to the integrated development of the upstream and downstream petrochemical industries through government-related companies.
- The expensive investments in domestic petrochemicals still pose some risks from potential revision in regulation and competition with state-owned companies. Moreover, the one-gate unification of investment permits and fiscal facilities, which were previously handled by two different ministries, potentially creates a moral hazard.
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