T

he government is seeking a US$1 billion investment from South Korea’s Samsung Group, the world’s largest private conglomerate by revenue, in the fields of solar cell technology, coal, crude palm oil and infrastructure.

Amir Sambodo from the Office of the Coordinating Minister for the Economy, said Friday that executives of Samsung C&T Corporation — a subsidiary of Samsung Group focusing on engineering and construction as well as trading and investment — were meeting with government officials to realize the investment using the public-private partnership (PPP) scheme.

“Samsung did not mention the size [of the investment] but they must have prepared US$1 billion as they said they wanted to invest in coal, to expand into CPO and then energy, even offering to be included in infrastructure projects such as bridges,” Amir said after a meeting with Samsung executives at his office in Jakarta.

Through meetings with the Office of the Coordinating Minister for the Economy, Industry Ministry and the Investment Coordinating Board (BKPM), Samsung is seeking government approval to conduct feasibility studies for its planned 50-megawatt solar power plant and coal expansion in Kalimantan, Amir added.

“They also proposed developing local manufacturing, so it’s going to be a large-scale solar power plant,” he said, comparing the investment with state electricity monopoly PT PLN’s 1-megawatt solar power plant.

Amir estimated the total investment for the power plant project alone at between $150 million and $200 million.

Solar energy, converting sunlight into electricity, could potentially produce cheaper electricity.

The supply of electricity in Indonesia is still dominated by fossil fuel-based resources — oil, gas and coal — but the government has pushed efforts to develop renewable sources to provide cleaner energy.

Samsung established and operated an estimated $7 billion wind and solar power clusters in Ontario, Canada, which, over the next 20 years, will generate up to 2,000 megawatts as well as solar power facilities that will generate up to 500 megawatts, the largest in the world.

The site for its Indonesian solar power facilities are being studied.

“They are assessing locations in Java, Bali or other islands,” Amir said, adding that Korea’s Exim
Bank would help finance Samsung’s investments.

“We also have the Indonesia Infrastructure Guarantee Fund, which could be used for cooperation on investment,” he added. Coordinating Minister for the Economy Hatta Rajasa welcomed Samsung’s investment plans, saying the investment agreement would be signed on May 18.

“Samsung is very serious in growing the solar energy industry. They are very eager to develop renewable energy. They are committed to investing,” he said at his office following the meeting.

Samsung’s investment is part of South Korea’s planned $12 billion investment plans for Indonesia — including Posco’s $6 billion joint venture with state-owned steelmaker Krakatau Steel and Hankook Tire’s planned $1.2 billion tire production plant, with the Indonesian government forming a special team to accelerate the realization of the plans.

The South Korean investment plans are part of the Indonesian government’s efforts to raise funds to realize its 2011-2025 economic master plan.

Indonesia is among the most attractive emerging market investment destinations for foreign investors, with the economy growing at one of the fastest paces in the world at 6.1 percent last year on the back of rising investments.