Strong demand keeps plastic industry growing
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The nation’s plastics producers can expect stable sales growth this year on continued demand, particularly from food and beverage producers, a business group says.
Fajar Budiyono, the secretary-general of the Indonesian Olefin, Aromatic and Plastic Industry Association (INAplas), said on Tuesday that local producers anticipated that domestic sales of raw materials and finished products would be US$4.8 billion this year, which would be up 7 percent from last year.
“Sales will be driven principally by demand from the industrial sector, mainly the food and beverage industry,” Fajar said on the sidelines of an industry conference in Jakarta.
The food and beverage industry would comprise 40 percent of the industry’s sales this year, followed by agriculture packaging (15 percent), automotive and electronics makers (7.5 percent) and the construction sector (7.5 percent), according to Fajar.
The Indonesian Food and Beverage Association (Gapmmi) has said that sales would top Rp 770.96 trillion ($80.1 billion) this year, which would be up 8 percent from last year’s Rp 712 trillion, helped by robust consumption and price increases.
INAplas chairman Amir Sambodo said that to meet rising demand, local exporters planned to produce around 3.2 million tons of plastic this year, which would be up 7 percent from last year.
“On the upstream side, we will still face challenges as we still import a sizeable amount of raw materials. On the downstream side, production will be good,” he said.
Local plastic makers rely on imports due to raw material shortages in Indonesia.
For example, Polytama Propindo, operator of a polypropylene plant in Indramayu, West Java, halted operations last year when it could not secure petroleum-based propylene from state-owned oil and gas firm PT Pertamina.
The industry currently sources approximately 40 percent of the petrochemicals it uses to make plastics from overseas every year.
Most of the nation’s plastics imports, comprising principally propylene and polyethylene, come from neighboring countries, including Singapore, Malaysia and Thailand, as well as from Europe, the US and the Middle East.
Arianna Susanti, business development director of the Indonesian Packaging Federation, said that the industry wanted to book Rp 51.06 trillion in revenue this year, which would be up 11 percent from last year, boosted by food and beverage industry demand, which comprises 70 percent of sales.
Other sectors, such as pharmaceutical and cosmetics, would also push up demand, she said.
Separately, sales of four-wheelers, a key consumption indicator in Southeast Asia’s largest economy, have been tipped to increase to 1.2 million, which would be up 7.5 percent from last year, boosted by solid economic growth bolstering people’s purchasing power.