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Petrochemical industry warns of job cuts amid rising plastic imports
The plastic and petrochemical sectors are bracing for potential mass layoffs as industry groups sound the alarm, citing surging imports, weak demand and a lack of global competitiveness.
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Workers assemble electric motorcycles on Sept. 21, 2023, at Plant II of manufacturer PT Terang Dunia Internusa in Citeureup, Bogor, West Java. (Antara/Arif Firmansyah)
T
he plastic and petrochemical sectors are bracing for potential mass layoffs as industry groups sound the alarm, citing surging imports, weak demand and a competitiveness gap between local and foreign producers.
The Indonesian Olefin, Aromatic and Plastic Industry Association (Inaplas) voiced concerns about a sharp decline in the petrochemical industry’s utilization rates, now nearing 50 percent, warning that this could result in widespread layoffs across the sector.
“The drop in utilization is driven by multiple factors, including declining petrochemical prices and persistently weak consumer purchasing power,” said Inaplas secretary-general Fajar Budiono, as quoted by Kontan on Sunday.
Despite a fall in raw material prices, orders for local producers remained low, Fajar said, adding: “Raw material prices are expected to rise [again] in about two weeks, but the demand is still sluggish and largely met by imports.”
Read also: Waves of lay-offs sweep Indonesia’s export-oriented industries in 2023
Typically, petrochemical production utilization rates are above 60 percent, he said, but a downward trend has persisted since August.
Fajar also pointed out that layoffs in connected sectors, such as textiles and food, along with halted government infrastructure projects ahead of regional elections, had further pressured consumer purchasing power. “If this continues, consumer purchasing power will weaken further, impacting the petrochemical industry even more,” he said.
