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RI addresses investment issues with S. Korea, Japan
Industry Minister Airlangga Hartarto has addressed various concerns over foreign investment in Indonesia and wooed investors during his visit to South Korea and Japan last week
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ndustry Minister Airlangga Hartarto has addressed various concerns over foreign investment in Indonesia and wooed investors during his visit to South Korea and Japan last week.
In South Korea, Airlangga met up with top executives from steel giant Posco, petrochemical producers LG International and Lotte Chemical and trading firm SK Trading International. Meanwhile, in Japan he persuaded Sojitz Corporation to jack up its investment in Indonesia and elaborated on business opportunities in Southeast Asia’s largest economy when addressing the Japan External Trade Organization (JETRO).
During the meeting with Posco executives, he requested the firm speed up construction on a hot stripped mill, which has only progressed to 17 percent as of May, Airlangga revealed Monday.
The mill is being built jointly by the world’s fourth-largest steelmaker and Indonesia’s biggest steel producer PT Krakatau Steel (KS) through their joint venture, PT Krakatau Posco (KP). At present, the joint venture (JV) is 70 percent owned by Posco.
“As requested by KS, it will become the majority shareholder. We discussed how to realize the 10 million tons goal faster,” he told reporters.
The hot stripped mill is crucial to help Indonesia build an integrated steel complex with an overall capacity of 10 million tons by 2025 and reduce reliance on imports.
The plant is set to have an annual capacity of 1.5 million tons of steel when complete in 2019.
At present, production facilities of KS along with KP in Cilegon, Banten, can make 4.5 million tons of steel a year.
Airlangga further said that he had asked Lotte Chemical to soon kick off the construction of its naphtha cracker in Cilegon with an estimated investment of US$3.5 billion and a capacity of 2 million tons.
The firm has already acquired 60 hectares of land out of 100 ha required.
“We asked them [Lotte] about the schedule [of development], because they request a tax allowance. I demanded that the tax allowance be adjusted to the new schedule,” Airlangga explained.
The Industry Ministry’s director of the upstream chemical industry, Muhammad Khayam, however, said Lotte Chemical would possibly request another tax incentive, namely a tax holiday.
“With a $3.5 billion investment, they will propose for that [tax holiday] in the capacity of a pioneer industry,” he said.
In another development, the industry minister also persuaded LG International to utilize the gas from the Masela Block in Maluku to feed its planned petrochemical plant to be built with Indonesian firm PT Duta Firza.
During the meeting with SK Trading International, the firm told Airlangga about its intention to reinvest in Indonesia after spinning off its textile business in the country.
Separately, in his meeting with Japanese diversified group Sojitz Corporation, Airlangga was updated on the firm’s plan to set up a methanol plant in collaboration with Indonesia’s fertilizer producer PT Pupuk Indonesia and Germany’s Ferrostaal.
“Sojitz is the firm with experience in that [field],” he said, referring to a methanol plant it operates in East Kalimantan.
Japan was Indonesia’s second biggest foreign investor last year with an overall investment of $5.4 billion, while South Korea ranked in the ninth place with total spending of $1.06 billion, according to data from the Investment Coordinating Board (BKPM).
