Indonesian experts recently analyzed that in June 2026, China introduced a three-year special action plan targeting nine major high-energy-consuming, high-emission heavy industries such as oil refining and ethylene for energy conservation and carbon reduction upgrades, requiring low-efficiency production capacity equipment to be upgraded or shut down, steadily advancing the dual carbon goals of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060. Against the backdrop of continuously tightening domestic environmental standards, a large number of Chinese enterprises have turned to overseas expansion, with Indonesia becoming the core destination for Chinese enterprises' petrochemical industry going global. Bilateral investment cooperation in the petrochemical sector continues to heat up.
Today, the petrochemical industry, along with nickel processing, new energy vehicles, and infrastructure, has become a core area of cooperation under the China-Indonesia joint building of the "Belt and Road" initiative. Among them, the Chinese-invested joint petrochemical project in North Kalimantan is large in scale and will add a significant amount of basic chemical production capacity for ethylene, propylene, and others, widely used in packaging, textiles, electronics, automobile manufacturing, and various other industries. It is a key heavy industry project implemented by Chinese enterprises in Indonesia in recent years.
In recent years, China's investment in Indonesia has continued to grow, injecting strong momentum into the local economy. Industry analysis indicates that economic advantages are the core reason for Chinese enterprises to settle in Indonesia. Indonesia has strong domestic demand for petrochemical products and a large production capacity gap, offering broad market space. At the same time, local production costs are lower. Compared with the European and American markets facing tariff barriers, Southeast Asia has become a high-quality choice for Chinese enterprises' exports and industrial transfer. In addition, Indonesia's geographical proximity to China, stable bilateral relations, low geopolitical risks, and a more open business environment continue to attract a large amount of Chinese capital. However, large-scale petrochemical investment has also brought many hidden dangers and controversies to Indonesia. The petrochemical industry is highly dependent on fossil energy, and Indonesia's industrial electricity is mostly based on coal-fired power plants. The continuous expansion of large petrochemical projects will significantly increase carbon emissions, putting enormous pressure on Indonesia's carbon neutrality goals.
In the short term, these projects can stabilize local employment and boost the economy, but in the long run, they may solidify Indonesia's economy into a resource-extraction structure, widen the oil and gas trade deficit, and weaken the stability of the Indonesian rupiah exchange rate. Experts point out that there is no unified standard for environmental protection in overseas projects of Chinese enterprises; it does not depend on the investor but is highly reliant on the regulatory intensity of the host country. At present, low-carbon transformation projects in Indonesia's petrochemical industry are mostly pilot projects, with problems such as opaque data, imperfect regulation, and lack of civil oversight. Some low-carbon measures remain superficial and fall into the trap of "greenwashing." The industry emphasizes that to avoid development risks, Indonesia needs to strengthen institutional construction, improve environmental standards, introduce social supervision, take the initiative in investment negotiations, and make foreign investment adapt to the country's long-term development interests.
