Turnover in the packaging industry of Indonesia stood at around IDR 50 trillion (approx. USD $3.8 billion) in the first three quarters of 2016, flat from turnover generated in the same period one year earlier. Ariana Susanti, Director of Business Development at the Indonesian Packaging Federation (FPI), said turnover in the industry grew in Q1-2016 but was under pressure in the following two quarters. Overall, the situation is still better in 2016 compared to 2015 when - amid sliding economic growth and bleak purchasing power - turnover fell.

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Sales in Indonesia's plastic industry are expected to rise 6.5 percent to 4.3 million tons (roughly USD $8 billion) in 2016 supported by rising plastic and plastic products demand in those industries that use these materials (for example, Indonesia's food & beverage industry and the automotive industry). Fajar Budiono, Secretary General of the Aromatic, Olefin and Plastic Industry Association (Inaplas), said the year 2016 should be a good one for the plastic industry as the economy of Indonesia has started to stabilize after a prolonged slowdown.

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Three Indonesian sectors are expected to be negatively affected by the government's proposal to impose an excise tax of at least IDR 200 (approx. USD $0.02) on plastic bottles and packaging. These three sectors are the food & beverage sector, the packaging sector, and petrochemicals. Last week, the Indonesian government unveiled its plan to introduce a new excise tax in an effort to collect additional tax money, while protecting the environment as the tax should lead to a reduction in consumption of plastic products. However, the plan led to fierce criticism from dozens of industry associations.

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The government of Indonesia proposes to impose an excise tax of at least IDR 200 (approx. USD $0.02) on plastic bottles and packaging. This proposal is part of talks about revisions to the 2016 State Budget (APNB-P 2016). Later this week, the government will discuss the matter with Indonesia's House of Representatives (DPR). Around the globe several countries (including Great Britain and India) have imposed such an excise tax on plastic bottles and packages, both for additional tax revenue and as a measure to protect the environment.

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Indonesia's exports of plastics and plastic products fell 18.5 percent year-on-year (y/y) in 2015 to USD $2.25 billion from USD $2.76 billion in the preceding year. This decline was caused by weak global demand for plastic, falling selling prices and the low competitiveness of Indonesia's plastics and plastic products. Also in terms of volume Indonesia's plastic exports declined. Based on the latest data from Indonesia's Trade Ministry, the nation's plastics export volume fell 5.58 percent (y/y) to 1.39 million tons last year.

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