Mixed bag: Indonesia’s 8% growth dream hits a plastic ceiling

The plastic bag is an unlikely symbol of economic frailty. But in Indonesia, the soaring cost of that humble everyday item is raising uncomfortable questions…

The plastic bag is an unlikely symbol of economic frailty. But in Indonesia, the soaring cost of that humble everyday item is raising uncomfortable questions about the country’s future growth prospects.

At a market in Depok, south of Jakarta, the plastic bags Budi needs to sell his chicken have nearly doubled in price. “Plastic is really expensive right now,” he said in an interview on April 17.

“Usually, I’d have to set aside at least 10,000 rupiah (58 US cents) for plastic bags, but now, I need a minimum of 15,000-20,000 rupiah. It’s quite a lot if I buy in bulk.”

That may sound like small change. But for Budi, who sells chickens for a maximum of 50,000 rupiah per kilogram and operates on razor-thin margins, it is the difference between staying afloat and going under.

“If I don’t raise the price, I’ll suffer a loss … If I raise the price, buyers will run away,” he told CNBC Indonesia.

Multiply Budi’s predicament across millions of street vendors, market traders and small food businesses, and what begins as a mundane packaging story becomes a window into something much larger: the growing vulnerability of Indonesia’s economy to external shocks – and the weaknesses those shocks are beginning to expose.

People eat lunch at a street food stall in Jakarta. For more than a decade, Indonesia’s economy has expanded at a reliable annual clip of 5 per cent. Photo: AFP

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