Environment Sustainability in Petrochemical Industry in Indonesia

Yuary Farradia and  Abdul Talib Bin Bon

Faculty of Technology and Management

Universiti Tun Hussein Onn

Batupahat, Johor , Malaysia

juaryfarradia@yahoo.com,  talibon@gmail.com

Tutus Rully

Faculty of Economics Pakuan University Bogor, Indonesia

tutusrully@rocketmail.com

Abstract

Indonesia, have embarked on basic petrochemical product expansion.  Despite the effort for expanding domestic petrochemical plants, however, petrochemicals contribute to Indonesia emissions due to its relatively high share of biomass.  In order to prevent further degradation of the environment, Indonesia’s Industry Ministry has prepared a new regulation to set sustainability requirement and layout the incentive for businesses to help the country lower its carbon emissions by 29% by 2030.  Green Supply Chain Management plays the main role for the manufacturing industry to reduce the environmental impacts to the business which could reduce the business cost incurred to the business. The overall objective of this study is to identify the extent of external GSCM practices toward environment sustainability and to draw the relationship between external GSCM practices on environment sustainability of petrochemical industry in Indonesia.  External GSCM consist of green purchasing and reverse logistic. This study was conducted among petrochemical olefin manufactures based in Banten Province Indonesia. The result showed that External GSCM has direct effect on environment sustainability which supported by the Indonesia Ministerial Decree No 6/2013 regarding company environmental performance program namely PROPER program.

Keywords

Environment Sustainability, External Green Supply Chain Management, Petrochemical, Green Purchasing, Reverse Logistic