L

ion Group has revived its plan for an initial public offering (IPO) to develop a 600-hectare industrial hub for '€œwholesalers and home industries'€ in Lebak, Banten province.

The plan means that Lion Group is setting out to adopt as its main corporate agenda President Joko '€œJokowi'€ Widodo'€™s campaign of generating more jobs and upgrading the competitiveness of the country'€™s labor-intensive industries.

'€œWe need to conduct the IPO in 2016 as we need the money to develop the Lebak project. We might sell 30 percent of our stake to the public,'€ Lion Group chief executive Rusdi Kirana told a group of reporters in Rome, where Lion Group signed a US$1 billion deal to purchase 40 aircraft from ATR
Aircraft, a European joint venture formed by Airbus Group and Alenia Aermacchi. '€œRoughly, we expect to raise Rp 10 trillion [$820 million] from the IPO.'€

If realized, the IPO plan, which represents a delay of their initial 2015 target to go public, will be one of the biggest initial share offerings in the country.

According to Rusdi, he has recently personally discussed the Lebak project, which will become the largest of its kind in the country, with President Jokowi and the President '€œwas very happy'€ to welcome the idea of enhancing Indonesia'€™s home industries through the hub.

He said the hub would improve production and distribution of local products by integrating an airport, factories, housing, exhibitions and other supporting infrastructure in one place. As the hub will also connect to a seaport in the future, it would attract foreign wholesalers who want to meet up with Indonesian suppliers to arrange purchases and shipments.

Rusdi did not provide details about the hub, but said it would be able to accommodate three times more traffic than the crowded Soekarno-Hatta International Airport. In earlier media reports, he said the hub would include an airport for the main low-cost carriers with capacity for up to 50 million passengers. It would have four runways, including one capable of taking A380 superjumbos.

Rusdi cited the concerns the President expressed during a recent ASEAN summit business forum that Indonesia'€™s poor distribution infrastructure had made the prices of commodities rise in Papua and other areas in the eastern part of the archipelago.

Looking at Taiwan as one of the references for the hub development, Rusdi said he thought the hub would help absorb more workers and revive the country'€™s home industries.

With a population reaching about 250 million, Indonesia is facing a constantly high demand for employment with only 40.2 percent of the 125 million workforce in the formal sector, which comprises companies and recognized institutions, leaving the remaining 59.8 percent employed in the informal sector, as shown by data released by the Central Statistics Agency (BPS) for February.

Rusdi further said that the hub would also use a profit-sharing scheme as a business model.

The company has finalized the land acquisition. '€œNext year, we will be breaking ground,'€ Rusdi added.

Aside from the mega-hub project, the owner of one of the world'€™s fastest-growing airlines also said that his company would lend a helping hand in improving the connectivity of the 17,000-island archipelago, especially through assistance in the building of N-219 aircraft by state-owned PT Dirgantara Indonesia.

'€œWe have the leverage, thanks to our good relationship with foreign engine-makers, to get more competitive prices for PT DI so that they [PT DI] could build more aircraft, not only to cater to domestic needs, but also [to the needs of] other developing countries,'€ Rusdi said, explaining that developing countries, such as Myanmar, Cambodia, Timor Leste and Papua New Guinea, might also need cheaper aircraft to improve their connectivity.

Rusdi said that PT DI could source other parts, like tires, chairs and bodies, to local producers and, therefore, reduce much of the cost of production and make the 19-seat aircraft more competitive and ready to compete with those of the same category, including Canadian Twin Otters and Chinese Y12s.

In September this year, PT DI kicked off the building of light passenger aircraft that will ply domestic routes, especially in remote areas across Indonesia, as those aircraft can land on shorter runways. The aircraft is expected to be ready for a public rollout in August 2015 and have its first take-off later in December before undergoing a certification process with the transportation ministry for commercial use scheduled to start in 2016.

'€œThe success in building aircraft with more local components will make the N219 aircraft viable and economic. It can be produced commercially for more competitive prices,'€ Rusdi said, adding that the success might '€œallow it to regain its reputation as [a source of] national pride'€.