Exclusive, Inaplas Secretary General Fajar Budiono: When the War Erupted, the State Had to Find Alternative Materials

The war in the Middle East that broke out after the US and Israeli attacks on Iran has had widespread effects. According to the Secretary General (Sekjen) of the Association of Indonesian Olefin, Aromatic, and Plastic Industries (Inaplas), Fajar Budiono, plastic industry players are also affected. This is because the naphtha which is the raw material for plastic ore in Indonesia is 100% imported and 70% of which comes from the Middle East. Therefore, according to him, the government must immediately find alternatives to deal with this situation.

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The high dependence on one product and one region such as the Middle East is indeed very worrying. Moreover, when a war breaks out as it is now, the situation becomes chaotic. And, no one knows for sure when this conflict will end.

Therefore, according to Fajar Budiono, finding alternatives is a crucial step - whether it is finding a new supplier of raw materials, or finding other sources of raw materials outside of oil that have been used so far.

"The government has deployed business attachés in various embassies to explore which countries can be sources other than the Middle East countries. In addition, finding alternative materials outside of petroleum is also important so that the industry is not stuck on one source alone," he said.

Still according to Fajar, it is not only the government that can play a role; business actors and the community also have a share. "Ways to package products can be reduced in size and quality. Then, the public must also be wise in using plastic. When shopping, try to bring your own bags and containers that can be used repeatedly," he explained.

In addition, the use of recycled plastic, he continued, can be the main choice when raw materials are difficult or expensive. Full support needs to be given to plastic recycling entrepreneurs. "The current need is 2 million tons of plastic that are ready to be recycled, while their capacity is only 1.5 million tons. So, there are still 500,000 tons that can be driven," said Fajar Budiono to Edy Suherli, Bambang Eros, and Dandi Juniar when visiting the VOI office, Tanah Abang, Central Jakarta, April 14, 2026.

The petrochemical industry is often referred to as the mother of all industries. When there is a war in the Middle East, how quickly does the tremor reach the plastic factory floor in Indonesia?

This war was initiated by a sudden attack by the US and Israel on Iran on February 28, 2026. Hearing the news, our alarm bells went off; this incident will definitely have an impact. And it turned out to be true, the long-term war has started to have an impact now. After the first week of the war passed, we started making scenarios to secure raw materials.

After two weeks passed, the price of raw materials rose up to four times. In the second week, many plastic companies in ASEAN declared force majeure because they were affected by the war. The problem is, they can't fulfill the commitments in the old contracts that have been signed.

In the third week, suddenly the Strait of Hormuz was closed. In addition, several petrochemical refineries in the Middle East were attacked. This adds to the complexity of the situation to be more complicated. At the same time, we in the country are focusing on preparing products to face fasting and Eid. In terms of logistics, our expedition also cannot move because of the ban on non-food trucks to operate during H-10 to H+10. During that period, the dynamics of the world continued to move and prices continued to change. After the market reopened after H+10, everyone panicked because prices had jumped.

What can be done to secure raw materials with the closure of the Strait of Hormuz?

The raw material for plastic ore in the form of naphtha is still 100% imported, and 70% of it comes from the Middle East. The closure of the Strait of Hormuz makes raw materials scarce and a hotbed. Finally, we are looking for raw materials from Central Asia, Africa, and the United States (US). And currently, we have managed to get supplies from the US.

If the supply is from the US, the travel distance is much longer, right?

The delivery of raw materials from the US takes the fastest 50 days with much more expensive transportation and insurance costs. For comparison, if it is from the Middle East it only takes 10-15 days. Because of the abnormal situation, we have to pay a surcharge of 100-150% per metric ton from normal conditions.

Currently, the price of naphtha is above 1,000 USD per metric ton, although the normal price is in the range of 600 USD per metric ton. Hopefully the delivery will run smoothly, so that in the next 50 days the supply has arrived in the country. The prediction is that the scarcity of plastic ore can be controlled, but the challenge now is just a matter of price.

So how about the price, will you apply a new price?

For the publication of prices, we are waiting for several official sources such as ICIS (Independent Commodity Intelligence Services), Platts (S&P Global Commodity Insights), The Plastics Exchange, and others. The information we have, in India prices have started to fall, as well as in China because they are releasing their reserves. Domestically there has also been a slight decrease in prices.

"In the future, there is indeed a chance of an increase, but with this condition, my prediction is that the increase will not be too big. So, the first homework (PR) about the availability of stock can be overcome.

Then the second PR is how to reduce dependence on naphtha raw materials from crude oil. So far, crude oil has been processed into fuel and part of it has become naphtha for plastic ore raw materials. The problem is, in addition to the Strait of Hormuz being closed, refineries in the Middle East are also attacked, so it will take 6-12 months after the war to be able to produce again.

Therefore, the substitution of materials is very important, such as how to process condensate and LPG into raw materials. We are waiting for directions from the Ministry of Energy and Mineral Resources and Industry regarding the availability of materials. For LPG, it has been subject to a 5% import duty, hopefully the government can provide relaxation on this matter. Now the challenge is to find a ship to order raw materials from the US, because our ships are still many that are stuck in the Strait of Hormuz.

So, this war in the Middle East makes many people in the world miserable. Cursed is the person who causes the war. Then, what else will Inaplas do?

Yes, everyone is affected. Since the third week of the war, many have surrendered and declared force majeure. In the fourth week of the war, those who have raw materials choose to hold stocks and do not want to sell. Only in the fifth week did things change after China began selling its reserves.

Why did China actually release its reserves?

It turns out that during the COVID-19 pandemic yesterday, China developed its petrochemical industry not only using crude oil raw materials, but also from coal. Then they use limestone for carbide, which is then processed into acetylene and ethylene. This is also cheap. Another one, they also develop from bio, gas, and methanol. So the diversification is complete. While we only have one source, namely from crude oil.

"For Indonesia, what is the problem? Do we not have the ability?

"Since 2008, we have given input to the government to increase the source of raw materials, not just one, so that it can meet the needs of the petrochemical industry in the country. Actually there is Chandra Asri who will enter, but halfway they canceled their plans. They chose to buy a refinery from Singapore (Shell).

"Our need for plastic raw materials reaches 8.5 million tons per year. The country is only able to supply 50% of this need, the rest is imported. Actually this is an opportunity that can be utilized. This is also a warning so that we are not dependent on petroleum alone; when there is a war like now, we should have options.

The Ministry of Industry has gathered industry players. Will the meeting end with concrete solutions or just a 'fresh breeze'? When will it be realized?

A week before the meeting, we were invited by the Ministry of Industry, the essence of "shopping problems" to be conveyed to the Minister. Then on Wednesday, April 22, 2026, plastic industry players from upstream to downstream were gathered.

Regarding the naphtha that is the raw material, the government will look for alternative suppliers when the Middle East is at war. Then, because LPG will be used as an alternative material to replace naphtha, we ask that the import duty, which has been 5%, be evaluated, and within a week there must be results. It seems that the government will implement the Government-Undertaken Import Duty (BMDP) system. Later, who will coordinate is the Ministry of Industry, Trade, and Finance. The prediction is that in June, July, and August the price of LPG will be lower than naphtha; this is an opportunity that must be optimized.

The Ministry of Industry also asked about the obstacles experienced by downstream actors. The good news is that the supply of plastic finished materials is still safe. It is hoped that the pattern of people's purchases will not be excessive, just spend as much as necessary. Manufacturers are also asked to innovate in packaging goods, by reducing size, weight, or thickness to save money.

You can also use additives and recycled plastics (plastic recycle), this is quite economical. Our plastic recycling industry is currently producing below its maximum capacity. This momentum can be the starting point for the rise of the plastic recycling industry and can be a substitute for the main plastic raw material.

Consumer behavior can actually help, too, right?

Yes, from now on, get used to sorting waste properly. That way, scavengers can use plastic waste, cardboard, paper, and others as recycled materials. Scavenger friends can also earn an income. Meanwhile, the remaining materials from sorting can be used as energy fuel. But all parties must synergize to achieve this goal.

What about the IKM and UMKM perpetrators?

The Minister has said that the availability of plastic materials is safe. Like the 1998 crisis, friends of the MSME will redesign their packaging. It has proven to be effective and economical. The lower market is relatively resistant, unlike the vulnerable modern industry, such as instant noodle packaging factories, candy, sachet coffee, and other packaging. The problem is, their machines are already made in such a way that they can no longer be reduced flexibly.

Apart from ensuring the supply of raw materials, what else do plastic entrepreneurs hope for from the government?

"Apart from the import duty, we hope the government will increase the utilization of the recycling industry. If there are incentives, whether the VAT is borne by the government or other facilities, their production capacity can increase. This can help meet the need for plastic raw materials. Current needs reach 2 million tons, while their capacity is only 1.5 million tons. So, there are still 500,000 tons that can be driven.

Iran is sanctioned for decades but its industry is actually independent because its people are forced to 'love' their own products. Do our industries need to be 'forced' into such a crisis condition first so that they can really be free from import dependence?

The current crisis and war are an important note that we must be independent in terms of food, metals, petrochemical industries, and energy. These four pillars must be secured. Currently, we must no longer rely solely on petroleum. There is still coal and CPO that can be an option. Now the coal price is good, and our CPO production is the largest in the world. This must be developed. There is also biomass, because by 2030 all flights must use bioavtur. This momentum must be utilized. From the biomass industry, we can produce bionafta and LPG replacement materials.

At a time like this, the public must also be encouraged to be proud of using domestic production. We also have to change lifestyles. Abroad, there are many breads sold without plastic packaging, while here everything is wrapped. Can this be reduced? The same goes for packaging of beans, tempeh, and other foods. If we can use packaging repeatedly, why not? Using environmentally friendly items is actually better. We have to change habits.

Returning to the global issue, what can be done if the war continues?

"We have to manage the global supply chain. The private sector must find alternative materials to replace oil, which has created dependence. The government must foster G2G (Government to Government) relations so that it can get goods from countries that have not been major partners, such as Central Asian countries, Africa, and Russia.

People can also do something by changing habits: sorting garbage and using environmentally friendly packaging that can be used many times. This step, if done massively, can help reduce dependence on existing virgin plastic.

The first time he came into contact with the plastic world was after graduating from college and joining a British plastic company that opened a factory in Merak, Banten. However, after a few years, Fajar Budiono briefly turned to an oil and gas company. Finally, he returned to the plastic company until his retirement. Even though he has retired, he is still asked to be involved in the plastic association and his colleagues' company in Bekasi.

Fajar Budiono experienced his first experience working in a petrochemical plant for plastics in Indonesia when he worked at PT PENI. "At first I didn't think about wanting to work in Jakarta. After completing my S1 in Chemical Analyst, I took the opportunity from British Petroleum Chemical which opened a polyethylene plant in Merak, called PT Petrokimia Nusantara Interindo (PENI). Because the plant was not yet finished, I trained everywhere and in 1991 the plant was finally inaugurated," recalled Fajar.

From the beginning of trying and pursuing, the plastic world made Fajar more interested. "Because most of the people who work are young people, the competition is very tight. Finally I decided to add knowledge. After work, I studied for a master's degree in Jakarta. With hard work, the education was finally completed," he said.

"I then joined the oil and gas company, Elnusa. It turns out that this new world has something to do with petrochemicals where I first started my career," he said.

Working at Elnusa allows him to travel around Indonesia. "I have to visit refineries and drilling in various regions, from the Java Sea, Natuna, to Biak," he said.

Wandering in the world of oil and gas made Fajar Budiono think. He has a family who also needs attention. "I thought, if in the oil company and always have to travel around the area, the attention to the family is very little. Finally I decided to return to the plastic industry. I joined PT Polytama Propindo which was inaugurated in 1995 by President Soeharto," he said.

The love of the plastic world makes Fajar feel at home and no longer turn to other industries. "I stayed at PT Polytama Propindo until my retirement age was reached in 2023," he said. However, even after retirement, he is still active in plastic associations and companies in Bekasi.

At this company, Fajar is involved in the marketing department. This position makes him meet a lot of users from business actors and MSMEs. "As a marketing staff, I have a lot of contact with various parties. When I meet them, I can absorb any aspirations and input that can be used for the next production improvement," he said.

Not only the issue of plastic, from the interaction on the field, he also learned about political issues and leadership changes in this country, ranging from Suharto, Habibie, Gus Dur, Megawati, SBY, Jokowi, to Prabowo Subianto. "Every change of president always has turmoil and it is felt in the plastic industry," said Fajar, who has been active in Inaplas since 2001.

It turns out, getting involved in the plastic world and joining Inaplas made Fajar interact with Bank Indonesia. Periodically, he was invited to discuss and tell about the developments in the plastic industry. "Including when BI wants to develop QRIS as a payment model, we are invited to discuss," he said.

"It turns out that the practicality of people shopping with QRIS affects the use of plastic packaging. Then online shopping through QRIS also makes the use of plastic increase drastically," he added.

Another experience that Fajar Budiono had never imagined before: by being involved in national and world plastic associations, he had the opportunity to visit many countries for meetings and other duties.

"It was really unimaginable before that I could travel around the world. To Europe, Latin America, Africa, Asia, Australia. I am amazed by Rwanda; a country that was once in a state of chaos because of the war is now clean and growing rapidly. Some call it the Singapore of Africa," said the man who serves as Head of Country of the World Plastic Association (WPA).

"So my friends are a lot, in Indonesia of course, also from other countries whose representatives participate in the WPA trial," he explained.

From the experience of traveling around the world, said Fajar, he could take a lot of lessons. "The four pillars that must be secured are: food, metals, petrochemicals, and energy. When a crisis like this happens, the country that can secure these four things will be relatively calm," said Fajar, who is now also engaged in the cultivation of chrysanthemum and bean flowers.

Going to the flower and bean garden turns out to make Fajar move a lot. "If I go to the garden I move a lot, at least walking. That's indirect exercise," he said.

In addition, by going to the village, he can see the reality of rural people's lives. "Farmers, if they are harvesting, they are quite profitable, but can it meet their needs for a year until the next harvest? Many farmers are not enough, so we help farmers like this. How can they manage the harvest to be enough for their living needs until the next harvest season," concluded Fajar Budiono.

"The raw material for plastic ore in the form of naphtha is still 100% imported and 70% from the Middle East. If the Strait of Hormuz is closed, raw materials will be scarce and a hotbed,"

Fajar Budiono