Strait of Hormuz is Turbulent, Government Bans Import Duty for LPG for Industry

JAKARTA - The government is preparing a number of steps to keep the economy moving amid global turmoil, including the risk of supply disruptions from the Strait of Hormuz region. One of the quick decisions taken was to reduce the import duty on LPG for industrial needs from 5 percent to 0 percent.

Coordinating Minister for the Economy Airlangga Hartarto said the policy was taken because the domestic packaging industry had difficulty getting naphtha. In fact, the material is needed for food derivatives, plastics, and packaging.

"Regarding food, where the derivative is plastic and packaging, today it was decided that our refinery plant cannot supply domestic packaging needs due to difficulties in obtaining naphtha," said Airlangga in the Investor Daily Roundtable: Measuring the Rhythm of the Economy, Accelerating Growth in the midst of Global Turbulence, Friday, May 1.

Airlangga said the shortage of naphtha in the short term could be replaced with LPG. Therefore, the government removed the import duty on LPG for industry.

"The import duty on LPG, which is usually 5 percent, is specifically for our industry, 0 percent, so it is hoped that the shortage of naphtha can be overcome by LPG," he said.

This step was discussed in the first meeting of the Government Program Acceleration Task Force to Support Economic Growth. This task force was formed through Presidential Decree Number 4 of 2026 by President Prabowo Subianto.

The government stated that national energy security was still safe. Indonesia's fuel imports are relatively small, around 20 percent, with supply sources from Africa, America, and a number of other regions. Gas and fertilizer supplies are also claimed to be maintained because Indonesia still records a surplus in fertilizer production.

Outside of energy, the government is speeding up business licensing through the simplification of Technical Approval or Pertek with a Service Level Agreement. If the application is not completed within a certain time limit, the process can continue so that business actors get certainty.

The Indonesian National Standard or SNI process will also be improved with a transparent and time-limited tracking system. Construction and business permits, including PBG and SLF, are also accelerated to support MSMEs and government priority programs.

The government is also targeting new markets through BRICS and the completion of the Indonesia-European Union Comprehensive Economic Partnership Agreement or IEU-CEPA. Airlangga said the government remained optimistic about facing global uncertainties.

"As the government and with the direction of the President, we must continue to be optimistic in facing various uncertainties," he said.