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November 29, 2019

Volume 7 Issue 8

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Indonesia Seeks Larger Role for Domestic Blenders

Indonesia has enough lubricant blending capacity to meet domestic demand, but because of high levels of imports it utilizes only half of that capacity, according to data released recently by the national Ministry of Industry. The government hopes its new SNI lubricant standard will change that.

“We want to continue to increase the utilization [of local blending plants]. Moreover, with the implementation of [Indonesia’s] mandatory lubricant standard or SNI, it may encourage the role of the national industry,” Muhammad Khayam, Director General of the Chemical, Pharmaceutical and Textile Industry of the Ministry of Industry said in a statement. The Indonesian mandate for lubricants to meet the country’s new national SNI standard took effect in September.

Locally blended lubricant volumes account for 900,000 kiloliters of Indonesia’s domestic demand, and the remainder – about 1.1 million kiloliters – are imported, Khayam said.

Indonesia currently has 44 lubricant blenders with combined capacity to make 2 million kiloliters of lubes per year. But production volumes are limited to about 908,360 kiloliters per year, including 781,190 kiloliters of automotive lubes and 127,170 kiloliters of industrial lubes, the ministry said.

Lubricant exports from Indonesia reached U.S. $147.6 million in value for the first half of 2019.

The number of workers at blending plants in Indonesia reached 3,157 in 2018.

Indonesia is providing various incentives, like up to 100 percent of corporate income tax exemption, in a bid to become a major automotive producer for the region. The ministry reported that it held a meeting with major Japanese automotive manufacturers where Honda confirmed it would invest 5.1 trillion rupiah (U.S. $362 million) between 2019 to 2023 for production of new models, and Toyota provided a Rp 28.3 trillion expansion plan for their Toyota, Daihatsu and Hino products in the same period.

Tanks at a Pertamina blending plant

Photo courtesy of Pertamina

Tanks at a Pertamina blending plant in Indonesia, which currently has 44 lubricant blenders with combined capacity to make 2 million kiloliters of lubes per year, according to the country’s Ministry of Industry.