Coordinating Minister for Economic Affairs Airlangga Hartarto has indicated that a policy to eliminate import duties on liquefied petroleum gas (LPG) is expected to be issued soon by the Ministry of Finance as part of broader efforts to stabilise domestic energy prices.
Airlangga said the government is preparing a zero percent import duty policy for LPG imports in response to rising global energy costs, which have been affected by ongoing geopolitical tensions in the Middle East.
“All commodities based on oil are experiencing price changes. For example, plastics are made from naphtha. One of the measures being allowed is LPG imports with a zero percent import duty. This is currently being processed by the Ministry of Finance,” Airlangga told reporters at the Presidential Palace Complex on Friday (22/5/2026).
The proposed policy is part of the government’s broader strategy to control inflationary pressure on energy-related goods, including downstream products such as plastics, which have also seen price increases following higher naphtha costs derived from crude oil.
The government had earlier confirmed plans to introduce fiscal incentives in the form of import duty exemptions for LPG and selected plastic raw materials for a period of six months.
Under the proposed policy, LPG imports would no longer be subject to import duties starting in May 2026, compared to the previous tariff of 5 percent.
The policy also expands duty exemptions to key plastic feedstocks, including polypropylene (PP), polyethylene (PE), linear low-density polyethylene (LLDPE), and high-density polyethylene (HDPE).
“All of these will be given zero percent import duty, but only for a six-month period. After that, we will reassess the situation,” Airlangga said earlier.
Energy and Mineral Resources Minister Bahlil Lahadalia previously said Indonesia’s annual LPG consumption reaches around 8.6 million tonnes, while domestic production is only about 1.6 to 1.7 million tonnes.
This leaves a significant supply gap of approximately 7 million tonnes that must be met through imports.
“The rest, about 7 million tonnes, is imported. This has been the case since the conversion from kerosene to LPG,” Bahlil said at the Presidential Palace Complex on 27 April 2026.
He added that the government continues to explore ways to secure LPG supply stability. “We are constantly thinking and working on this almost every night, studying potential LPG sources,” he said.
Data from the Directorate General of Mineral and Coal shows that LPG consumption between January and February 2026 reached 26,000 metric tonnes per day.
During the same period, total demand reached 1.56 million metric tonnes, of which around 1.31 million tonnes, or 83.97 percent, was covered by imports, while domestic production accounted for only 130,000 metric tonnes.
In terms of import sources, Indonesia’s LPG supply as of 1 April 2026 was dominated by the United States, which accounted for 68.91 percent of total imports.
The second-largest supplier was the United Arab Emirates (11.83 percent), followed by Saudi Arabia (7.36 percent). Qatar contributed 5.21 percent, Australia 3.81 percent, and Kuwait 2.61 percent of total imports.
The heavy reliance on imports underscores Indonesia’s structural dependence on external LPG supply sources, particularly amid fluctuating global energy markets and geopolitical instability affecting oil-linked commodities.
The planned tariff exemption is expected to reduce import costs and help stabilise domestic prices, especially for households and industries that rely heavily on LPG as a primary energy source.
Plastics industry players are also expected to benefit from reduced feedstock costs, as naphtha price volatility continues to affect downstream manufacturing sectors.
The policy, once implemented, will be reviewed after six months depending on global price movements and domestic supply conditions.
Government officials say the measure is designed as a short-term intervention while longer-term strategies to strengthen domestic energy resilience continue to be developed.
