INDONESIA – The growing middle-class in Indonesia, coupled with its new government’s efforts to boost growth, is expected to bolster the country’s demand for petrochemicals, in particular polyolefins.
Speaking at the recent 2nd ICIS Asian Polyolefins Conference in Singapore, Joshua Pardede - an economist with Indonesia-based PT Bank Permata – said that Indonesia’s economic growth is expected to accelerate to around 6% to 6.5% in the medium to long term.
This will help boost demand for chemical products amid efforts by the government to boost infrastructure spending and incentives for foreign investors to build new production capacities in the country, he explained.
Currently, the domestic chemicals industry is able to supply around 3.6 million tonnes of plastic a year, below Indonesia’s total demand of 4.3 million tonnes, according to Pardede.
In the last five years alone, foreign direct investment in chemicals in Indonesia has recorded a steady average annual increase of more 13%, Pardede said: "This is a clear indication of Indonesia's increasing attractiveness for foreign investments in the chemicals sector.”
In 2013, the country's plastic packaging industry grew by 8% to around US$5.3 billlion, with the food and beverage industry representing 40% of the total sales, he said.
Indonesia's overall per capita consumption of plastic goods remains low at 10kg annually compared with the rates of increase in Thailand at 56% and Malaysia at 45%, he noted, adding: "This leaves plenty of scope for future growth.”