Six-month tax break on key plastics and LPG aims to curb packaging and food cost spikes.
Indonesia will temporarily remove import duties on selected plastic raw materials and LPG for the petrochemical sector from May, seeking to contain surging plastic prices triggered by disrupted naphtha supplies from the war in Iran.
Policy Move And Timeline
Coordinating Minister for Economic Affairs Airlangga Hartarto said on April 28 that import duties on certain plastic products and LPG used by the petrochemical industry will be cut to zero per cent for six months starting in May, after which the government will reassess market conditions before deciding whether to extend or adjust the measure.
Reasons Behind The Duty Cuts
Domestic plastic prices have jumped between 50 and 100 per cent due to supply disruptions in naphtha imports from the Middle East, linked to the war in Iran; Airlangga warned that higher plastic costs are feeding through to packaging and could push up prices of everyday goods, including food and drinks, if left unchecked.
Targeted Products And Existing Rates
The temporary duty waiver applies to materials used for plastic packaging such as polypropylene, LLDPE and high density polyethylene, which currently face import tariffs of about five to 15 per cent, and will also cut the tariff on LPG imported by petrochemical firms from five per cent to zero per cent to reduce feedstock costs.
Intended Impact On Prices
By lowering input costs for plastic producers, the government hopes to dampen further increases in the prices of plastic and plastic packaged products and to ease pressure on manufacturers’ margins, while giving the industry breathing space to adjust to naphtha shortages and seek alternative supply arrangements.
Reassessment And Inflation Risk
Officials say the six month window is designed as an emergency cushion rather than a permanent liberalisation, with a review planned to weigh fiscal revenue losses against benefits in moderating inflation, especially as higher packaging and fuel costs threaten to spill over into broader consumer price rises.
Indonesia’s duty cuts on plastic raw materials and LPG reflect the speed at which global energy shocks can ripple through industrial inputs and consumer prices, forcing swift policy responses. For Indonesians, the move aims to keep essentials more affordable while protecting manufacturers from extreme cost swings; for Singaporeans, it shows how regional neighbours are using targeted tax tools to manage imported inflation risks and maintain stability in cross border supply chains.
Sources: Asia One (2026) , CNA (2026)
Keywords: Naphtha Shortage, Plastic Packaging, LPG Duty Cut, Airlangga Hartarto, Inflation Control
