Approximately 90 percent of Indonesia’s cracker feedstock is naphtha, reducing Indonesia’s competitive standing.
• One issue for the petrochemical business is the lack of production integration. Due to regulatory policy, petrochemical players in Indonesia lack value chain integration. Foreign companies can only operate in either the upstream or downstream sector, but not both.
• Crude oil production declined to 826,000 b/d in 2013. This is approximately 50 percent of oil produced in 1995. As such, security of feedstock is a concern. Indonesia is now a net-oil importer, contributing to a rising fiscal deficit.
• Vast and economically growing demand market of over 200 million people presents a huge opportunity to
investors. Demand for petrochemical products far outweighs domestic supply.
• There is a particular need for commodity petrochemical investment such as in PE (Polyethylene), which has import
portions ranging from 20-100 percent and PP (Polypropylene), which has an import share of 30 percent.
• To penetrate the Indonesian market, a joint venture with local partners is one potential solution that can facilitate market entry and operations.