The inability of Indonesia’s polyester sector to meet demand for the raw material called, Mono Ethylene Glycol (MEG), is causing problems. It is feared that downstream industries like textiles and others may suffer as a result of this issue.
Redma Gita Wiraswata, the Chairman of the Indonesian Fiber and Filament Yarn Producers Association (APSyFI), stated that the issue stemmed from erroneous estimations made during the policy-making process since MEG is scarce. Under typical circumstances, Indonesia needs 600,000 tons of MEG annually as a raw material for polyester.On the other hand, the production capacity of MEG in Indonesia is only 200,000 tons per year.However, in the last three years, Indonesia has only been able to produce about 50,000 tons of MEG per year. “As a result, we have to import MEG, mostly from Saudi Arabia,” said Redma.In general, one MEG producer is operating in the country, namely Polychem Indonesia. APSyFi received information that this year Polychem Indonesia does not yet have a MEG production plan. So, if MEG imports cannot be carried out and the supply of MEG domestically is nil, then all Polyester factories will automatically stop operating. Because MEG is one of the main raw materials for making Polyester.According to APSyFI admits, there is Permendag 36/2023, since last week MEG producers in Saudi Arabia have not wanted to send their products to Indonesia until there is further clarity on the rules. Therefore, currently, Polyester producers rely on the remaining MEG stock which will last for the next 3 weeks.”If this problem is not resolved soon, the Polyester factory will stop operating and lay off all its employees,” added Redman. Another impact is that the supply of Polyester as a raw material for the textile, bottle, and packaging industry will be sluggish, so the entire industry chain is forced to depend on imported raw materials.Indonesia has the potential to lose export foreign exchange of around US$ 600 million because 20% of the national Polyester production is sold abroad.
Furthermore, APSyFI has conveyed this problem to the government since December 2023 and actually, the government is very aware of this problem and the impact that will be generated. “However, until now there is no way out and solution,” he concluded.
