Hulu Petrochemical Industry Must Be Protected From Attack On Imported Products

Illustration. (Photo: Doc. Antara)

JAKARTA - The petrochemical industry players who are members of the Indonesian Aromatic and Plastic Olefin Industry Association (Inaplas) have complained about the flood of imported products, especially from China, which is increasingly difficult to dam after the government relaxed its import policy through the implementation of the Regulation of the Minister of Trade (Permendag) Number 8 of 2024.

Inaplas asked for import regulations to be tightened again through the re-implementation of Permendag 36/2023. By re-implementing the regulation of Permendag 36/2023, as well as the implementation of trade barriers in the form of Anti-Dumping Import Duty (BMAD) and Safeguard Measure Import Duty (BMTP) is a hope for the upstream petrochemical industry to again encourage increased utilities from the upstream petrochemical sector, which is currently below 80 percent. In fact, these barriers have an impact on stopping factory operations from Inaplas members.

Responding to this, the Economist of the Center of Economic and Law Studies (Celios) Nailul Huda explained that the upstream petrochemical sector has a very significant contribution to the Indonesian economy. When viewed from GDP data, this industry provides the second largest contribution, namely 2 percent after the Mamin industry at 6.7-7 percent.

These two industries are interrelated because the Mamin industry also relies on the upstream petrochemical industry in terms of packaging. If we total, the contribution of both can reach 9-10 percent of the national GDP.

"As one of the national strategic industries, upstream petrokima is one of the key industries that has an effect on other industrial sectors such as food, automotive, textile and others. The development of the upstream petrochemical industry is one of the important things considering its contribution to GDP and large employment. Now, when the utility of the upstream petrochemical industry is below 80 percent, it can be a threat because employment will also decrease," added Nailul Huda Nailul Huda when interviewed on one of the national televisions, quoted Friday, August 9.

Many consider that the Regulation of the Minister of Trade (Permendag) Number 8 of 2024 to cause problems. When viewed from several articles, there are several items whose import prohibitions are removed. These imported products are increasingly difficult to contain after the government implements the import policy through the enactment of the regulation.

If the circulation of raw materials and imported plastic goods continues, it is not impossible that many local plastic production factories will close. This is certainly detrimental to other industries that use a lot of plastic products, such as food and beverages, household appliances, automotives, and others. The problem of flooding in Chinese imported products can be resolved if the government immediately fixs existing import regulations.

This 'Permendag 8' needs to be reviewed by sharing considerations that this can have a negative impact. It is necessary to make regulations that listen to what industry players say, not only downstream industry but also upstream industry, so it is sustainable to make a rule that is prudent for industry in order to create a good and optimal investment and industrial climate for the national industry," said Nailul Huda.

Previously, University of Sebelas Maret (UNS) economist Ernoiz Antriyandardi said that the import tightening policy instrument was needed to protect domestic industries, especially if the industry was not competitive in trading.

According to him, tightening imports can be an opportunity to develop the competitiveness of the petrochemical industry, so that Indonesia becomes a market for domestic petrochemical producers. This is in line with the government's strategic plan which also makes the petrochemical industry one of the industrial sectors that gets special attention.

"With the return of tightening of petrochemical imports, it is hoped that petrochemical imports will decrease significantly. Furthermore, it will be a trigger for the domestic petrochemical industry to innovate and develop technology so that its production can meet domestic needs. Thus, dependence on petrochemical imports has decreased, domestic production has developed, petrochemical sector competitiveness has increased and the trade balance in the petrochemical sector is no longer a deficit," he said.