Sunday, 7 July 2013

CONSUMPTION OF PLASTIC PRODUCTS IN INDONESIA QUITE LARGE



The Ministry of Industry continues to encourage the development of downstream plastic industry because it has good market potential both at home and abroad. Records of the ministry of industry stated that today national consumption per capita per year is only 10 kilograms (kg), relatively low compared to other ASEAN countries, such as Singapore, Malaysia, and Thailand which reached 40 kg. This was conveyed by Panggah Susanto, Director General of manufacturing industry Base of the ministry of industry in Jakarta on Tuesday (5/14).
               
Panggah said that the potential consumption of plastic product in Indonesia is still quite large. According to him, the biggest demand in the form of plastic packaging is driven by the growth of the food & beverage industry which produces rigid packaging, flexible packaging, thermoforming, and extrusion, which is spreading across several regions. The installed capacity of the national plastic packaging industry reached 2.35 million tons per year and its utilization reached 70%, so the average production reached 1.65 million tons per year. Labor absorption is also quite large, about 350.000 people.
               
Plastic consumption in Indonesia is projected to reach 1.9 million tons by the first half of 2013. This amount increases approximately 22.58% over the same period last year at 1.55 million tons.
               
The momentum of the golden harvest and approaching Lebaran in early August is a factor that drives the increase in domestic demand for plastics. Meanwhile, the sales value of the plastics industry in the domestic market reached approximately Rp.47.5 trillion in the first half of 2013, assuming that consumption reached 1.9 million tons (1.9 billion kg) and the price is Rp.25, 000 per kg. Turnover of the first quarter is worth Rp.22.5 trillion and Rp.25 trillion in this quarter.
               
However, Panggah admitted that Indonesia is still heavily dependent on plastic raw materials. According to him, import of plastic raw materials is greater because so far the petrochemical industry depends on imported raw materials. Because the growth of the upstream sector of this industry cannot keep pace with the growth of the downstream sector. “Each year, the petrochemical industry in the country imports such products with a value of USD5.5 billion”, Panggah said.
               
According to Panggah, plastic raw material price are very vulnerable to oil. Because if the global crude oil price increases, the price of plastics raw materials also increases. This happened last year where price of plastics raw materials crept up. The price of plastics raw materials (polyethylene) has increased by 10% - 15% due to rising world’s crude oil prices. He said that when crude oil prices rise, it will have an impact on the increase in raw materials prices.
               
He said that the development of national plastics industry is also constrained by the lack of capacity of refinery that produces naphtha and condensate for the upstream petrochemical industry. He said that limited raw materials makes Indonesia still relies on imported naphtha and condensate. In 2010, imports of naphtha reached 1.6 million tons and condensate 33 million barrels. “The need for raw materials is an essential factor for the movement of the industry. “Unfortunately, the need for raw materials, especially plastics, still cannot be fully met”, Panggah said.
               
To that end, he said, the government continues to encourage the development of an oil refinery industry integrated with petrochemical industry in order to strengthen the structure of the plastics industry fro upstream to downstream by providing incentives, such as tax holiday, tax allowance, and import duty exemption for capital goods. Moreover, he added, the government is also encouraging the development of human resources as and effort to boost the plastics industry. (E) 


 Business News - May 17,2013

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