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View all search resultsGovt exempts LPG, plastic precursors import duties amid supply strains
The government has been scrambling since earlier this month to secure supplies of naphtha, a raw material used to produce plastic, from alternative sources such as African countries, India and the United States.
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Plastic price hike: A vendor arranges plastic bags on April 9 for sale at Toko Dua in Palangka Raya, Central Kalimantan. Prices of plastic-based products have surged after the Idul Fitri holiday according to the vendor, rising by about 50 percent, leading to decreased purchasing power among the public. (Antara/Auliya Rahman)
T
he government has decided to temporarily waive import duties on liquefied petroleum gas (LPG) and certain precursors for plastic pellets, aiming to prevent inflationary pressures as the Strait of Hormuz chokehold strains supplies.
Coordinating Economy Minister Airlangga Hartarto announced on Tuesday that the existing 5 percent duty on LPG imports, along with tariffs ranging from 5 to 15 percent on certain plastic precursors, would be exempted for the time being.
The senior minister said prices of plastic raw materials had skyrocketed “by 50 to 100 percent”, prompting the government to act to prevent broader price hikes, particularly in “food and beverage products”.
The plastic precursors listed in the measure comprised polypropylene, polyethylene, linear low-density polyethylene (LLDPE) and high-density polyethylene (HDPE), all of which will be exempted for six months.
Airlangga said the measure would be evaluated after the initial exemption period but did not specify whether the same implementation window applies to LPG. The import permit requirements to these goods would also be loosened.
The rising price of plastics was brought about by supply strains of naphtha, a petroleum byproduct used to produce ethylene and propylene, the main building blocks of plastic resins.
Almost three quarters of global naphtha supplies came from Middle Eastern oil producer countries and the war between the United States-Israel and Iran has naturally limited its flows out of the region.
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