JAKARTA: Indonesia’s exports of plastics and plastic products fell 18.5 percent year-on-year (y/y) in 2015 to USD $2.25 billion from USD $2.76 billion in the preceding year. This decline was caused by weak global demand for plastic, falling selling prices and the low competitiveness of Indonesia’s plastics and plastic products. Also in terms of volume Indonesia’s plastic exports declined. Based on the latest data from Indonesia’s Trade Ministry, the nation’s plastics export volume fell 5.58 percent (y/y) to 1.39 million tons last year.
Despite the decline in both volume and value, Budi Susanto, Vice Chairman of the Aromatic, Olefin and Plastic Industry Association (Inaplas), said he believes Indonesia’s plastics export realization in 2015 was actually pretty decent considering the difficult global economic context. He added that this decline in export will not affect the domestic plastics industry too much as Indonesia’s plastics industry is supported by growing domestic consumption of various products (such as food and beverages) that require plastic packaging.
Susanto said the heavily depreciated rupiah exchange rate (against the US dollar) should make Indonesia’s plastics exports more competitive. However, as this industry is still dependent on imports of raw materials, the country could not take advantage of a weak rupiah. Moreover, global demand was weak hence causing weakening exports. The dependence on imports of raw material is the key reason why Indonesia’s plastics industry remains relatively uncompetitive and vulnerable to rupiah depreciation.
Although Indonesia’s plastics industry can rely on solid domestic consumption of plastic products, growth of domestic plastic demand in 2015 fell to 3 percent (y/y), whereas the usual growth pace is around 7 or 8 percent (y/y). Weaker domestic demand also caused a 12.3 percent (y/y) decline in imports of plastic products into Indonesia to USD $6.83 billion in 2015 from USD $7.79 billion in the preceding year.