LPG Import Duty Exemption is Good News for the Indonesian Petrochemical Industry

JAKARTA - The government has lowered the import tariff for liquefied petroleum gas (LPG) from 5 percent to 0 percent as a step to maintain the supply of raw materials for the petrochemical industry amid the conflict between Iran vs. the United States (US) and Israel.

The policy was taken in response to the potential shortage of naphtha, the main raw material for petrochemicals, whose supply depends heavily on the Middle East region.

Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arief revealed that the relaxation of the tariff is aimed at maintaining the continuity of the industrial supply chain from upstream to downstream.

"In principle, it is good news for the upstream petrochemical industry, there is a reduction in the import duty of LPG. But, what is important for us is to maintain the balance between the upstream and downstream industries. Well, we continue to maintain this balance," said Febri in the IKI April 2026 Release, quoted Thursday, April 30.

According to him, in the midst of global pressure, the policy is expected to help the industry remain optimally productive while maintaining competitiveness, both in the domestic and export markets.

Similarly, the Director of Upstream Chemical Industry of the IKFT Directorate General of Industry, Wiwik Pudjiastuti, added that this step was inseparable from the disruption of the distribution of naphtha due to the conflict in the Middle East.

The reason is that about 90 percent of the distribution routes for raw materials pass through the Strait of Hormuz, making it very vulnerable to geopolitical turmoil.

In the production process, naphtha remains the main raw material for the petrochemical industry. However, under certain conditions, LPG can be used as an alternative, although its use is limited.

"LPG can be used as a mixing material up to about 50 percent," he explained.

Citing the official website of the Coordinating Ministry for Economic Affairs, Thursday, April 30, the government officially poured stimulus to hold back the pressure on industrial costs amid a surge in global plastic prices and disruptions in the supply of petrochemical raw materials.

One of the main steps taken is the exemption of import duties on LPG to 0 percent for six months.

Previously, the imposition of import duties for plastic raw materials was imposed at a tariff of 5 percent-15 percent.

Coordinating Minister for the Economy Airlangga Hartarto said the policy was the result of a cross-ministerial coordination meeting that had been reported to President Prabowo Subianto.

"The provision of LPG incentives, primarily for the petrochemicals industry, in the form of a reduction in import duties to 0 percent, as an alternative raw material to replace naphtha which is currently experiencing supply constraints due to global dynamics, including conflicts in the Strait of Hormuz," explained Airlangga.

Airlangga explained, so far the petrochemical industry is very dependent on naphtha as a raw material.

However, because the supply is disrupted, the government is moving quickly by preparing other raw material alternatives, namely LPG.