The government is preparing a fiscal incentive package, including the elimination of import duties on LPG and plastic raw materials. Coordinating Minister for Economic Affairs Airlangga Hartarto said the measure is aimed at curbing price increases driven by geopolitical tensions. 

Airlangga stated that the government has reduced the import duty on LPG from 5% to 0%, providing an alternative feedstock supply for the petrochemical industry affected by disruptions in naphtha. 

“The import duty on LPG has been reduced from 5% to 0%, allowing refineries to shift from naphtha to LPG as an alternative feedstock,” Airlangga said during a press conference at the Coordinating Ministry for Economic Affairs in Central Jakarta on Tuesday, 28 April. 

He explained that disruptions in naphtha supply have occurred due to the conflict in the Strait of Hormuz, making it difficult for industries to secure their primary raw materials. The government is encouraging the use of LPG as a short-term substitute while seeking alternative sources of naphtha supply. 

At the same time, the government has also eliminated import duties on several plastic products, including polypropylene (PP), HDPE (High-Density Polyethylene), and LLDPE (Linear Low-Density Polyethylene). According to Airlangga, the incentive will apply for six months and will be evaluated based on market developments. 

The government considers this step necessary given the surge in global plastic prices by 50–100%, which risks putting pressure on downstream industries, particularly the food and beverage sector that heavily relies on plastic packaging. 

“Therefore, import duties on plastic packaging have been reduced to 0% to prevent increases in food and beverage prices,” Airlangga said. 

In addition, Airlangga noted that the government is preparing several deregulation measures to accelerate industrial activity, including simplifying import licensing and enhancing transparency through digital systems. 

This article is published in partnership with Katadata 

Original article here