Unilever channeling additional $600m

Anglo-Dutch consumer goods giant Unilever plans to invest around US$600 million in Indonesia, and is asking the government to ensure that the supporting infrastructure is able to meet its needs.

“The investment will finance the expansion of [Unilever’s] three factories in Java. However, we also suggested that the company invest outside Java to boost economies in those areas,” Investment Coordination Board chief Gita Wirjawan told reporters after meeting at the State Palace on Thursday.

He said Unilever would build a new facility to process fatty acids, oil and chemicals from palm oil in Sei Mangkei, North Sumatra.

“The factory requires Rp 1.1 trillion [$124.20 million] in investment and will be completed within two years,” he said.

Gita said the government would provide incentives to Unilever such as a tax allowance for doing business in Sei Mangkei.

Unilever CEO Paul Polman said he was getting approval from Coordinating Economic Minister Hatta Rajasa to invest Rp 1 trillion to build a new factory in Surabaya.

“We will build a factory in Surabaya and other locations to product Dove soap and Dung Dung ice cream,” Polman said, adding that construction had already begun.

Separately, Polman told reporters after giving a public lecture at the University of Indonesia in Depok, West Java, that ice cream and soap sales had shown solid growth in recent years. The new facility for making Dove soap would also fulfill overseas market demands in addition to the domestic demand.

The new investment will add to the Rp 6 trillion the firm has already put into building production facilities and boosting capacity over the last four years, Polman added.

Unilever heads met with President Susilo Bambang Yudhoyono on Thursday to convey their firm’s commitment and some of its business plan in Indonesia. The executives included Polman, Unilever chairman Michael Treschaw and Unilever Indonesia president director Maurits Lalisang.

“I heard your commitment to resume investment in Indonesia and I support the plan,” Yudhoyono said at the meeting.

The President also said that Indonesia was in the process of boosting its economy by curbing poverty and famine, and that the country needed Unilever’s participation to support the process.

Polman said Indonesia played an important role in the global economy and Unilever liked doing business in Indonesia — the main exporter in the region for several Unilever products.

“We are so impressed with the fiscal and monetary situation and the growth rate in Indonesia. The President is also confident that even if the world’s economic situation is not so good, Indonesia will increasingly be a common engine for growth. This is important as well,” Polman said.

Besides explaining future projects, Unilever also asked the government to make guarantees for its investment in Indonesia.

“What we have to do is to make sure that when we make an investment, we have the right infrastructure to produce successfully. The President is very supportive,” Polman said, adding that Unilever had been in Indonesia for 77 years and was totally linked with the country.

Unilever came to Indonesia in 1933 and now manufactures a wide range of consumer goods and employs around 33,000 employees.