Indonesia Cuts Import Duties On Selected Plastic Raw Materials As Resin Costs Rise

Indonesia Cuts Import Duties on Selected Plastic Raw Materials as Resin Costs Rise

16-Oct-26

Indonesia has introduced a temporary 0% import duty on selected plastic raw materials for six months, effective 9 October 2026, as international resin prices rise and the government seeks to protect the competitiveness of its downstream plastics industry. Under Finance Ministry Regulation No. 68/2026, six specified tariff lines covering polymers of ethylene and propylene have been granted the zero-duty rate, replacing earlier duties of 10% on five of the specified tariff lines and 5% on one. The Indonesian Coordinating Ministry for Economic Affairs said that, PE and PP prices have shot up significantly in the recent months. The government said the objective is to improve raw-material availability, contain production costs and support the sustainability of downstream manufacturing.

The measure, however, is already generating an important industry-policy discussion within Indonesia. The government has said that initial feedback from processors indicates that some of the materials covered by the exemption do not adequately match the requirements of downstream sectors such as packaging, household products, agriculture and MSMEs, which frequently require polymer pellets. Jakarta has therefore indicated that it will evaluate implementation and consider industry feedback. This makes the Indonesian move more than simply a tariff reduction: it is an example of targeted, time-bound fiscal intervention being used to respond to volatile global polymer costs while testing whether the relief reaches the processors that actually bear the raw-material burden.

The development also offers a message for Indian policymakers and the Indian plastics processing industry. India itself temporarily removed customs duties on a broad range of critical petrochemical products, including PE and PP, during the West Asia supply disruption in April 2026; the relief was subsequently extended only until 15 July 2026. With polymer prices again elevated globally, Indonesia's latest action demonstrates how competing Asian manufacturing economies are using import-duty policy to protect downstream cost competitiveness. For India, the issue is not necessarily a blanket reduction in polymer duties, but whether targeted and time-bound duty relief should be considered when international resin prices rise sharply and domestic supply is insufficient, particularly for grades and applications where Indian converters compete directly with producers elsewhere in Asia.