The chemical industry is a manufacturing sector that processes natural and synthetic raw materials into chemical products used as raw materials, intermediate materials, or supporting materials across a wide range of industries — from food and pharmaceuticals to personal care, agriculture, and construction. Because of its broad application, the chemical industry is one of the key pillars of Indonesia's manufacturing supply chain.

What Is the Chemical Industry?

The chemical industry is a sector that produces or processes materials through chemical or physical processes to generate products that can be used again in various production processes. Its scope can be understood through the position of products in the value chain:

  • Basic/upstream chemicals — produce chemical raw materials in large volumes for the next stage of industrial processing.
  • Intermediate chemicals — convert basic chemicals into intermediate materials used as inputs for the next products or processes.
  • Downstream chemicals or specialty chemicals — produce materials with specific functions, specifications, or performance characteristics for more targeted applications.

This scope makes the chemical industry closely linked to many manufacturing sectors — chemical products serve as raw materials or supporting materials in the production of food, pharmaceuticals, cosmetics, cleaning products, coatings, plastics, textiles, fertilisers, and a wide range of industrial goods.

What Is the Role of the Chemical Industry in Indonesia's Economy?

How does the chemical industry contribute to manufacturing and the national economy?

The chemical industry holds a strategic position because its products serve as inputs for many manufacturing subsectors. Indonesia's Chemical, Pharmaceutical, and Textile Industry (IKFT) sector recorded growth of 5.11% in 2025, up from 4.21% in 2024, contributing 3.87% to national GDP. Within this group, the chemical and pharmaceutical subsector recorded the highest growth at 8.35% in 2025.

At a broader level, the manufacturing sector remains the largest contributor to Indonesia's GDP, with the Ministry of Industry targeting its contribution to reach 18.56% in 2026.

Why is the chemical industry important as a cross-sector raw material supplier?

Chemical products are used as raw materials and supporting materials across many industries:

  • Food and beverage: emulsifiers, stabilisers, food additives, and process support materials.
  • Pharmaceuticals and healthcare: active ingredients, excipients, and formulation support materials.
  • Personal care and household: surfactants, thickeners, emulsifiers, and other formulation materials.
  • Agriculture: materials for fertilisers, pesticides, and agrochemical formulations.
  • Construction and coatings: resins, dispersing agents, defoamers, binders, and other additives.
  • Plastics and polymers: monomers, resins, additives, and intermediate materials.

This position means that disruptions to chemical supply chains can have a direct impact on the production processes of industries that rely on them.

How does the chemical industry contribute to employment?

The chemical industry is part of the broader manufacturing sector, which plays a significant role in national employment. According to BPS data, approximately 13.86% of employed Indonesians in August 2025 were in the manufacturing industry category — making it one of the largest employment groups in Indonesia. This figure covers the manufacturing sector as a whole, not the chemical subsector specifically.

What Are the Sectors Within the Chemical Industry?

What is the basic chemicals or upstream chemical industry?

Basic or upstream chemicals produce large volumes of chemical raw materials that form the foundation for subsequent industrial processes. Examples include petrochemical products and various inorganic chemicals.

Petrochemicals play a particularly important role because their products serve as base materials for many downstream industries — plastics, fibres, textiles, packaging, electronics, automotive, and pharmaceuticals. The Ministry of Industry has placed the strengthening of the petrochemical industry as a priority in the development of the national chemical industry, as outlined in the national medium-term development plan (RPJMN) under Presidential Regulation No. 12 of 2025.

What are intermediate chemicals?

Intermediate chemicals are materials produced from the processing of basic chemicals, which are then used again to produce the next product. Examples include various intermediate materials for polymer, resin, coating, and adhesive production — including acrylic acid and acrylic esters, which are also being developed domestically in Indonesia for use in the emulsion, polymer, and resin industries.

What are downstream chemicals or specialty chemicals?

Downstream chemicals encompass materials used for specific functions and applications. A key part of this category is specialty chemicals — materials with specific formulations or functional properties used to enhance the performance of a product or formulation. Examples include additives, emulsifiers, thickeners, surfactants, dispersing agents, and defoamers.

Unlike general chemicals, which are more volume-oriented, specialty chemicals are evaluated primarily on function, specification, quality consistency, and application requirements.

Category Product Examples Key Characteristics Example Industries
Basic/Upstream Petrochemicals, inorganic chemicals Large volume, serves as raw material for next processes Plastics, textiles, automotive, packaging
Intermediate Acrylic acid, polymer intermediates Intermediate material for products or formulations downstream Polymers, resins, coatings, adhesives
Downstream/Specialty Emulsifiers, thickeners, surfactants, dispersing agents Specific application function and specification F&B, personal care, healthcare, coatings, agriculture

Where Are Chemical Plants Located in Indonesia?

Chemical plants are distributed across various industrial zones, particularly in areas with access to raw materials, infrastructure, ports, and manufacturing networks:

  • Cilegon, Banten — one of Indonesia's main centres for the petrochemical and chemical industry.
  • Cikarang, West Java — a major manufacturing zone with a wide range of industrial companies and production facilities.
  • Tangerang, Banten — home to many manufacturing facilities and chemical industries, as well as chemical end-users.
  • Gresik, East Java — a zone with significant chemical and manufacturing activity, including facilities in the Manyar area.
  • Surabaya and surrounding areas — a centre for industrial activity and distribution in East Java.

What is the scale of chemical plants in Indonesia?

The scale of chemical plants varies considerably. At the upstream end are large-scale petrochemical facilities producing chemicals in high volumes; at the downstream end are plants producing specialty chemicals, formulations, and additives with specific application functions.

This diversity means that raw material needs, storage systems, and distribution patterns can differ significantly from one facility to the next. For chemical distributors, proximity to industrial zones and the availability of a warehouse network are key factors in maintaining supply stability and delivery efficiency.

What Is the Difference Between a Chemical Plant and a General Industrial Plant?

Aspect Chemical Plant General Industrial Plant
Scope A specific part of the manufacturing industry Covers a wide range of manufacturing sectors
Raw materials Chemicals, natural materials, or synthetics Varies by product type
Process Frequently involves reactions, mixing, separation, or other chemical processes Depends on the type of manufacturing
Products Chemicals, intermediates, specialty chemicals Food, electronics, textiles, automotive, consumer products
Examples Petrochemical plant, resin plant, specialty chemicals manufacturer Food plant, electronics factory, textile mill

In short, a chemical plant is a type of industrial plant, but not all industrial plants are chemical plants.

What Is the Current Direction of the Chemical Industry?

The Ministry of Industry is actively driving the transformation of the specialty chemicals industry to become more productive, innovative, and competitive — including through upstream industry strengthening, value-added product development, and accelerating the domestic supply of specialty chemicals for various applications, as part of efforts to reduce dependence on imported specialty chemicals.

FAQ

What are the sectors or categories within Indonesia's chemical industry? The chemical industry is broadly divided into basic/upstream chemicals, intermediate chemicals, and downstream/specialty chemicals. Each occupies a different position in the value chain and serves different industrial needs.

What products does the chemical industry produce? Examples include petrochemicals, inorganic chemicals, intermediate chemicals, resins, polymers, surfactants, emulsifiers, thickeners, dispersing agents, defoamers, and a wide range of additives and specialty chemicals.

How do chemical plants maintain a stable raw material supply? Plants can maintain supply stability by choosing suppliers with adequate stock, a wide distribution network, clear lead times, appropriate storage facilities, and a procurement system capable of anticipating changes in production requirements.

What is the difference between a chemical plant and other industrial plants? A chemical plant specifically produces or processes chemical materials through defined processes. An industrial plant is a broader term covering all manufacturing facilities, including food plants, textile mills, electronics factories, and automotive plants.

How can manufacturers source quality and consistent industrial chemicals? Choose a supplier that can provide complete technical specifications and documentation, maintains quality consistency and product availability, has appropriate storage facilities, and offers technical support. Experience, the principals represented, distribution network, and procurement capability are also important factors.

How Does Bahtera Adi Jaya Support the Needs of the Chemical Industry?

PT Bahtera Adi Jaya is an industrial chemical distributor in Indonesia with over 20 years of experience, providing 800+ products from 50+ global principals to serve the needs of various manufacturing sectors. To support supply stability, Bahtera Adi Jaya has 6 warehouse distribution points across Jatake, Cikarang, Tangerang, Semarang, Surabaya, and Sidoarjo.

With a portfolio covering both general and specialty chemicals and backed by a wide distribution network, Bahtera Adi Jaya helps manufacturers secure chemical raw materials with more consistent quality and supply.

Contact the Bahtera Adi Jaya sales team to discuss your industrial chemical needs.

Further reading: The Vital Role of Chemical Distributors in Modern Industry and Chemicals in Our Daily Lives: The Invisible Helpers.