The Jakarta Post
The government has issued a policy to slash Indonesia’s raw material imports in favor of local industries as part of its endeavors to strengthen the national economy.
Currently, the Industry Ministry is drawing up a road map regarding strategies to achieve the import substitution target of up to 35 percent by 2022, which economists say will reduce the country’s reliance on imports.
The strategies include deepening the industrial structure, seeking independence in raw material production, developing the required regulations and incentives and optimizing the program that encourages the use of local content and domestic goods usage intensification (P3DN).
The priority for import substitutes will be given to high-value industries, such as the machinery, chemicals, metal, electronics and motorized vehicles sectors.
Economists and business players have hailed the policy as the right move, saying that increasing import substitution could potentially reduce the country’s current account deficit, which has continued to increase in recent months because of the country’s sluggish exports.
They also say that the increase in import substitution could potentially raise the country’s GDP, provide more job opportunities, enhance the competitive edge of business players and strengthen domestic manufacturing.
In relation to this, publicly listed PT Chandra Asri Petrochemical Tbk, a subsidiary of diversified petrochemical giant PT Barito Pacific Tbk, has commenced operation of its newly constructed methyl tert-butyl ether (MTBE) and butene 1 (B1) plants, both of which are located in Cilegon, Banten.
Chandra Asri boasted that the two plants were the first of their kind to be constructed in Indonesia in that they utilize Lumnus technology, one of the most sophisticated petrochemical processing technologies in the world.
The construction of the MTBE plant, which has a capacity of 128 kilo tons per annum (KTA), and the B1 plant, which has a capacity of 43 KTA, is in line with the government’s endeavors to achieve its 35 percent import substitution target.
The products from the MTBE plant will help meet domestic needs for octane booster, for which the country still relies on imports. As for the B1 plant, of the 43 KTA, 33 KTA will be used for Chandra Asri’s operations and the remainder will be for the domestic market.
The construction of the plants was completed on schedule despite the ongoing pandemic.
Industry Minister Agus Gumiwang Kartasasmita said, “The petrochemical industry in Indonesia plays a crucial role in providing import substitution and that’s why we have to spur its growth.”
He went on to say that, “Aside from their contribution to increasing import substitution, petrochemical companies like Chandra Asri also manage to attract new investors, which will, certainly, have a positive impact on the Indonesian economy.”
According to Industry Ministry data from 2018, Indonesia imported Rp 174 billion in methanol chemical products, including its derivatives, namely MTBE and B1. Methanol and its derivative products are imported from several countries.
Meanwhile, Chandra Asri president director Erwin Ciputra said, “Our main priority is to bolster the government and domestic industry to reduce reliance on imports. With the operation of the plants, we hope the government’s target to reduce imports of raw materials by 35 percent by 2022 can be achieved.”
Erwin said that Toyo Engineering Corporation (TOYO) and PT Inti Karya Persada Tehnik (IKPT) began construction of the two plants owned by Chandra Asri in 2018.
“We extend our appreciation to Toyo and IKPT for having successfully completed the construction amid the ongoing pandemic, which will enable us to operate the plants according to our plan,” added Erwin.