Proceedings of the International Conference on Industrial Engineering and Operations Management Bangkok, Thailand, March 5-7, 2019 © IEOM Society International Internal vs External Green Supply Chain Management at Petrochemical Industry Economic Performance 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 Hari Muharam Faculty of Economics Pakuan University Bogor, Indonesia hrmuharam@yahoo.com Abstract Indonesia's petrochemical sector contributes to 3% of Indonesia GDP and its demand should soon grow by 5% per year due to Indonesia's economic expansion. This is correlated with the economic expansion of Indonesia, since petrochemical derivative products are utilized in the production process of plastic products, pharmaceuticals, and textile. The Indonesia government put high effort on the integrated petrochemical industry development toward green industry in order to achieve better economic performance. The overall objective of this study is to draw the relationship between internal green supply chain management (GSCM) and external GSCM practices on economic performance of petrochemical industry in Indonesia. Internal GSCM consist of eco design and internal environment management. Whilst 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 Internal GSCM has no direct effect on economic performance, but external GSCM has a positive effect on economic performance. The external GSCM practice implementation not only reduce any cost from waste treatment, environment accidents, and energy consumption toward profit achievement as well as profit growth over the years, but also generate sales and earnings. Keywords Internal Green Supply Chain Management, External Green Supply Chain Management, Petrochemical, Economic Performance, 1. Introduction The petrochemical industry in Indonesia is one of the most important primary industries toward economic growth. It is the foundation of a wide variety of industrial production processes such as plastic and container, textile, rubber, agriculture, cosmetic, pesticide, cleaning agent, pharmaceutical, artificial skin, explosive material up to and fertilizer industries. These industries then create value added to Indonesia GDP as well as for exporting value. Indeed, the petrochemical industry is the sector experiencing the highest growth in Indonesia. This is correlated with the economic expansion of Indonesia, since petrochemical derivative products are utilized in the production process of plastic products, pharmaceuticals, and textiles, amongst others. Rambu Energy (2014), stated that Indonesia imported raw material used by petrochemical industry around US$8 billion since 2013. Hence, due to this imported raw material then upstream petrochemical industry offers thin margin and requires huge investment and advanced technology. One of the strategies for being sustainable in the business particularly in the business margin is to have a domestic plant of raw material supply instead of import. There are a number of petrochemical plants have decided to expand their plant capacity or building a new petrochemical plant. 3610