JakartaGlobe-Aug 19, 2024
An analyst recently warned against the flood of imported petrochemical products from the United Arab Emirates (UAE) following the implementation of a bilateral trade pact. The Indonesia-UAE Comprehensive Economic Partnership Agreement (IUAE-CEPA) has been in force since 2023. The pact is expected to trigger a flood of imported Emirati petrochemical products. Under the IUAE-CEPA, the import duty tariff for petrochemical goods has dropped to 2 percent, and will eventually go down to 0 percent in 2026. By that year, new petrochemical companies in the UAE will begin operating. As production capacity grows, so does the likelihood of petrochemical good imports from the UAE, prompting calls for a revision of the agreement or at least setting limits on the volume of imports allowed. Mohammad Faisal, the executive director of think-tank Core Indonesia, acknowledged the low import duty that Indonesia imposed for Emirati petrochemical goods. “This takes a toll on the market share of the local petrochemical industry,” Faisal recently told Investor Daily. Faisal said that the agreement also hampers petrochemical industrialization, especially in the upstream sector. He said industrialization policies should be followed by policies in the trade sector and others. The not-so-stringent surveillance at ports could also prompt a surge in imported petrochemicals. The excessive import could mean lower use of domestically produced petrochemicals. Faisal also called for a linkage between the downstream and upstream sectors if the government wishes to promote the domestic petrochemical and plastic industries. In addition to the anti-dumping policy, the petrochemical industry needs a more sustainable, long-term, and permanent approach. This is to maintain the competitiveness and sustainability of the petrochemical industry. Read more at: https://jakartaglobe.id/special-updates/expert-warns-against-flood-of-imported-petrochemicals-from-uae
