Indonesia to suspend the implementation of import quota mandate; market participants remained on the look

On 29 February 2024, in a virtual town hall session with importers, Surveyor Indonesia surprisingly announced that the government intended to suspend the implementation of the previously proposed import quota mandate that was initially scheduled to go into effect on 10 March 2024.

Surveyor Indonesia is an appointed governmental agency that is responsible for the collection of necessary statistical data that are crucial to the mentioned mandate.

According to the announcement, the authorities are looking at removing 11 out of 12 petrochemical products from the import quota regulation, which are: 

Apparently, the only polyolefin product that would still face import quota regulation this 10 March 2024 is PP block copolymer under the HS code heading 3902.30.90.

However, it is important to note that the Ministry of Industry or the Ministry of Trade has not signed any official Circular pertaining to the decision, from which market participants are encouraged to maintain a wait-and-see stance. 

NOT A CAUSE FOR CELEBRATION

Speaking to CommoPlast during the Meet@CommoPlast Jakarta 2024 event on 29 February 2024, various market players expect the suspension of the import quota implementation (if takes place) might be temporary and there is a high probability that the government might revive the mandate in the future.

“This regulation, in principle, would streamline the supply-demand as well as company income tax collection processes. We believe it is just a matter of time before the government re-introduces the scheme again,” a converter commented. The source said the current lethargic economic condition also curbs the government’s ability to push ahead with the mandate this time.

As discussed, except for LLDPE, Indonesia continues to depend heavily on imports for polyolefins to meet the local demand. Two new petrochemical projects, namely Chandra Asri II and PT Pertamina Rosneft are still in the development stage, which would take a few more years to complete construction. To heighten the trade barrier when the local supply is not ready would jeopardize the growth of the downstream markets.