Indonesia Faces a Plastic Packaging Crisis (And It's Not the Waste Problem)

If one thinks about it, life without plastic packaging would be extremely hard in Indonesia, perhaps even impossible. Snacks, meals, food, drinks, groceries, household and personal care products, and many other products are all packaged using plastic materials. In fact, as we will see below, for the poorer segments of society - such as farmers - plastics are crucial. Without plastic, the prices of most food we consume on a daily basis would be much higher.

In the past we have often discussed Indonesia's plastic waste problem. The combination of massive plastic consumption, particularly plastic packaging (which was even exacerbated by the COVID-19 crisis as this gave rise to a thriving food delivery market) and weak waste management is causing massive environmental problems in Indonesia. In this article, however, we move away from the plastic waste problem and, instead, focus on the current scarcity of plastic and plastic products in Indonesia. Since almost all food distribution (from rice to cooking oil) relies on plastic bags or containers, the plastic problem is rapidly evolving into a broader food inflation crisis.

What Is Causing the Trouble?

The disruption of raw material supplies due to the escalating conflict in the Middle East has triggered a domino effect across Indonesia’s domestic industries. This also includes shipments of naphtha. Naphtha is a volatile, flammable liquid hydrocarbon mixture obtained from distilling petroleum or coal tar. It serves primarily as a key feedstock for petrochemicals (plastics) and a blending component for high-octane gasoline.

Henry Chevalier, Chairman of the Indonesian Downstream Plastic Manufacturers Association (Aphindo), stated that the surge in raw material costs is now being felt by consumers, with price increases sometimes reaching 50 percent. The scarcity of naphtha, caused by the closure of the Strait of Hormuz, triggered an increase in production costs for downstream industries, which are then forced to pass those costs onto the final products.

The severe rupture in the supply chain caused a high degree of uncertainty that has made businesses hesitant to sign long-term contracts with customers due to the high risk of supply shortages, even if they remain financially capable of operating.

Table 1; Naphtha Imports into Indonesia (Top Sources) in January-February 2026:

Source Country	Import Value (in million US dollar)
United Arab Emirates	68.11
Malaysia	66.17
Egypt	47.24
Qatar	46.78
Saudi Arabia	33.07
Bahrain	30.99
Kuwait	25.33
Iraq	21.85

^{Source: Badan Pusat Statistik (BPS)}

Meanwhile, other major plastic packaging producers, such as China and South Korea, have started prioritizing their own domestic needs, thus banning or significantly limiting exports to Indonesia to secure their own inventories.

The Iran War caused a supply crisis and price surge in Indonesia because Southeast Asia's largest economy, is a major importer of petrochemical precursors. The production of plastic relies heavily on naphtha. Indonesia currently imports 100 percent of its naphtha needs (roughly 3 million tons per year), with around 70 percent of those raw materials originating from the Middle East.

The Indonesian government is currently scrambling to find alternative suppliers in Africa, India, and the Americas, although logistical challenges and longer shipping times (up to 50 days) mean that high prices are likely to persist for several months.

Table 2; Imports of Naphtha into Indonesia:

Year	Import Value (in billion US dollar)
2026 (January-February)	0.35
2025	2.34
2024	1.33
2023	1.37
2022	1.59
2021	1.54
2020	1.02
2019	0.96
2018	1.56
2017	1.37

^{HS Code 27101280
Source: Badan Pusat Statistik (BPS)}

The Vulnerability of Import Dependency

The price hikes have exacerbated pressures on the already strained industry. Currently, Indonesia’s domestic petrochemical industry can only meet about 50-60 percent of domestic. The remaining 40-50 percent is heavily reliant on imports, primarily from the Middle East and China.

Adhi Lukman, Chairman of the Indonesian Food and Beverage Association (Gapmmi), echoed these concerns, stating that the industry is facing price increases between 30-60 percent. He emphasized that scarcity is actually more dangerous than the price hike itself.

"Several of our suppliers have informed us that their raw material availability is extremely limited. Some can no longer meet the demands of the food and beverage industry. This is the heavier burden," Lukman said. Domestically, upstream production is reportedly running at only 30 percent capacity, further strangling supply.

Table 3; Imports of Plastics and Plastic Products into Indonesia:

Year	Import Value (in billion US dollar)
2026 (January-February)	1.82
2025	10.43
2024	10.76
2023	9.45
2022	11.12
2021	10.18
2020	7.15
2019	8.78
2018	9.21
2017	7.73

^{HS Code 39
Source: Badan Pusat Statistik (BPS)}

Indonesian Farmers

And while one can argue that the shortage of plastic is actually good news for the environment (as it means less plastic waste), this does also bring significant problems for Indonesia's economic and social development.

For example, most commercial vegetable farmers in Indonesia (especially those growing chilies, tomatoes, and melons) rely on plastic mulch, which is the silver-and-black sheets that cover the soil. These sheets prevent water from evaporating and stop weeds from stealing nutrients. Moreover, with virgin (non-recycled) plastic prices doubling to IDR 60,000 per kilogram, the cost of mulching one hectare has become very expensive. Without plastic, these farmers would face significantly lower yields (losses in yields can go as high as 40 percent) as well as higher labour costs to manually pull weeds.

Meanwhile, the journey from the farm to consumers' tables is paved with plastic. Crops like shallots, potatoes, and cabbage are transported in plastic mesh bags or woven sacks. The price of these essential disposable items has surged, eating directly into a farmer's narrow profit margins. And if a farmer cannot afford the plastic crates or bags needed for transport, more of the harvest rots before it even reaches the markets across Indonesia.

Threat to Food Security and Fertilizers

The state-owned food holding company, ID Food (PT Rajawali Nusantara Indonesia), stated that the plastic shortage is now hampering the packaging of essential food commodities.

CEO of ID Food, Ghimoyo, explained that the impact is being felt across all production lines. "This is crucial because it affects everything: all food products, all fertilizers, and all rice distribution use plastic sacks. Furthermore, retail packaging and cooking oil containers use the same materials," Ghimoyo stated during a hearing with Commission IV of the House of Representatives (DPR) in Jakarta. However, Ghimoyo did not detect a spike in prices yet.

The Government’s Response

The Minister for Micro, Small and Medium Enterprises, Maman Abdurrahman, confirmed that the government is listening to the grievances of small business owners. He noted that the plastic price surge is inextricably linked to the global spike in crude oil-based raw materials. He added that this means significantly higher production costs for Indonesian businesses, particularly those that are active in the food and beverage industry.

While the government is discussing mitigation strategies across various ministries, specific policies have yet to be detailed. Meanwhile, the Ministry of Trade is attempting to diversify supply sources by looking toward India, Africa, and the Americas. However, Ni Made Kusuma Dewi, Head of Public Relations at the Ministry of Trade, cautioned that shifting supply chains to these regions cannot be done overnight. Moreover, it would take three or four weeks longer to import the raw materials from other sources, implying that the shortage and high prices are to remain for weeks to come.

Similar to subsidized fuels, the Indonesian government might face a dilemma here. As the government subsidizes rice and fertilizers for the poorer segments of society, it must choose between raising prices of these subsidized goods or increase state spending on these goods as rice and fertilizers are packaged using plastics.

Lastly, the weak rupiah makes imports of naphtha and plastic resins more expensive as they are traded in US dollars.

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