P

rocter and Gamble Company (P&G), the world’s largest producer of fast moving consumer goods, has kicked off construction on its factory in Karawang, West Java, its first in Indonesia, with an anticipated investment of US$100 million.

Mohamed A. Ismail, the president director of PT Procter&Gamble Home Products Indonesia, said on Wednesday that the 51,000-square-meter manufacturing facility would produce baby diapers Pampers, P&G’s largest global brand.

He said that with 17 million babies aged 48 months and under, Indonesia was currently one of six Asian countries out of 11 worldwide with the largest baby populations.

“Every day 12,000 babies are born here and that’s bigger than certain countries. We believe that the growth of baby care products will be the key answer for the growth of P&G in Indonesia.

That’s why our first manufacturing plant produces baby diapers,” he said after the plant’s ground-breaking ceremony in Jakarta, which was also attended by Industry Minister M.S. Hidayat.

Ismail said that the plant, which will employ 400 workers when it becomes operational in 2013, would serve 8 million babies in the countries within five years.

Regi Aalstad, P&G Asia Baby Care&Batteries general manager and vice president for ASEAN, Australasia and India, said that outputs of the plant would be focused on Indonesia’s big and lucrative market, but possibilities would be open to serve the regional market as well.

In the first stage, most of the raw materials, such as wood pulp, will be sourced from existing suppliers outside the country, she said.

In Asia, P&G, which produces more than 50 branded products and recorded $79 billion in global sales last year, operates several production facilities, including in the Philippines, Vietnam, China, India and Japan. Currently, Indonesia imports Pampers from the Philippines.

According to Regi, the Ohio-based plant will continue to offer baby diapers “with the right quantity at the right price” as well as other products, such as shampoo packaged in sachets as well as bottles.

“Consumers are at the center of what we do. The right price, the right packaging need somehow to be locally adapted to enable us to compete,” she said.

She said that with the plant, P&G aimed to increase the contribution of its Indonesian subsidiary to its global sales, which was currently still “very small”.

In line with that, external relations director Bambang Sumaryanto said that P&G wanted to achieve a market leadership position in baby diaper products in the Indonesian market, which topped around 1.9 billion pieces per year. Currently, it is among the top three players for the product, he said.

“Indonesia’s promising growth, the government’s support for investments and our business growth in the double digits over the last three years in the country has encouraged us to set up our plant here,” he said when asked why it took so long for the firm to set up a production plant compared to its competitors.

Currently, its hair care product Pantene and personal care product Gillette have the largest market share in the Indonesian market.

Ismail said that P&G was still working closely with the government to seek possibilities for further investments in the Southeast Asia’s largest economy.

Reportedly, the firm is exploring possibilities to build a fatty alcohol plant to ensure a sustainable supply for its raw material needs.

He said that the company was still in talks with the government on its plan to build a fatty alcohol plant.

The company has not decided where the plant will be located, he added.

JP/ Linda Yulisman