Industrial Chemicals
Indonesia
Overview
USD Millions 2004 2005 2006 (estimated)
Total Market Size 7,339 8,926 9,769
Total Local Production 3,855 4,100 4,460
Total Exports 2,372 2,523 2,775
Total Imports 5,856 7,349 8,084
Imports from the U.S. 314.8 367.8 441.4
Note: The above statistics are unofficial estimates.
After being stagnant for several years, the Indonesian chemical industry is starting to grow. With a huge domestic market, low plastic consumption per capita, and high industry growth, the chemical industry offers a lot of opportunity. However, the industry also faces several problems such as low utilization of production capacity, high prices for basic materials as a result of soaring global crude prices and high imported prices. In addition, a lack of integration between the petroleum and petrochemical industries has become an obstacle to the industry's development.
Despite security issues and slower economic growth, foreign direct investment (FDI) in the country increased sharply in the last two years. The investment in chemical and pharmaceutical industries reached $632.1 million and $1.14 billion in 2004 and 2005 respectively. During the period January-July 2006, this sector also attracted $101.6 million in foreign direct investment.
Indonesia imported $5.8 billion worth of industrial chemicals in 2004. In 2005, the total import value of chemical products reached $7.3 billion. Imports of U.S products represented 5 percent of the total import value. The actual import value of U.S. products could be higher than reported, because many U.S. products are imported to Indonesia through Singapore. Other suppliers are Singapore, South Korea, Thailand, India, China, Germany and Japan.
Best Prospects/Services
In 2005, U.S imports amounted to $367.8 million, broken down as: $48.2 million inorganic chemicals (HS 28), $91.2 million organic chemicals (HS 29), $14.8 million chemical pharmaceuticals (HS 30), $4.3 million other chemical fertilizers (HS 31), $8.7 million chemical dyes (HS 32), $19.8 million essential oils & perfumes (HS 33), $90.4 million other chemicals (HA 38) and $90.5 million plastic products and raw materials (HS 39). U.S. share in each sub sector was 7% of all imported HS 28, 3% of HS 29, 9% of HS 30, 1% of HS 31, 2% of HS 32, 6% of HS 33, 14% of HS 38 and 5% of HS 39.
U.S. companies are strong suppliers of carbonates (HS 2836), epoxides (HS 2910), acyclic alcohol (HS 2905), polycarboxylic acids (HS 2917), medicaments nesoi (HS 3004), fertilizer (HS 3100), ink, printing, writing, drawing etc (HS 3215), odoriferous mixture (HS 3302), beauty, make up (HS 3304), binders for found molds (HS 3824), reaction initiators (HS 3815), insecticides (HS 3808), antiknock preparations (HS 3811), polyamides (HS 3908), polymers of ethylene (HS 3901), and polyethers, expoxides (HS 3907).
Opportunities
The Petrochemical industry needs $16 billion in investment to develop the local industry and to reduce the import of ethylene in the 2006-2015 period. According to Budi Susanto, Secretary General of the Indonesian Association of Olefin and Plastic Industry, investment is needed for developing the upstream and downstream industries. At a minimum, the industry will need 4 new plants with a capacity of 500,000 tons each and 200 companies on the downstream side. Demand for ethylene in 2006 is projected at 1.56 million tons and will reach 2.61 million tons in 2015. Demand for polyethylene will reach 1.023 million tons and 1.79 million tons in 2006 and 2015 respectively.
Currently, more than 50% of the raw material demand from various industries such as plastic, textile, pharmaceutical, electronics, automotive components, ceramics and glass is supplied by imported products. Besides facing the shortage of raw materials, the chemical industry in Indonesia is also faced with a lack of infrastructure facilities, inefficient and small-scale operations, and limited financial resources.
Resources
Ministry of Industry, website: www.dprin.go.id
PT Pertamina, website: www.pertamina.com