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T Asahimas Chemical, a subsidiary of the Japan-based Asahi Glass Company, aims to increase its production capacity by expanding its plant in Cilegon, Banten.

The company'€™s added capacity would see the manufacture of three products: caustic soda, vinyl chloride monomer (VCM), and polyvinyl chloride (PVC), according to comments made by the Industry Ministry'€™s director general for manufacturing, Benny Wahyudi, during a visit by Asahimas executives to the ministry on Friday.

The expansion would increase production of caustic soda, which is used to produce alumina, wood pulp and paper, from 200,000 tons per year to 700,000 tons per year, Benny said. It would also double the production of PVC to 800,000 tons annually, while the capacity of VCM would rise to 550,000 tons per year from 250,000 tons per year, he added.

Asahimas would be spending US$400 million on the project, while work on the expansion was expected to begin by the end of 2015, according to Eddy Sutanto, the company'€™s director, quoting the firm'€™s president director, Jun Miyazaki.

About 50 percent of the additional production would be used to increase the company'€™s exports, which had declined in the last two to three years due to the high demand in the domestic market, he said.

Asahimas was aiming its sights on new export markets, such as India and the Middle East, he added.

'€œWe used to export 40 percent [of our production], with 60 percent for the domestic market. With growing domestic demand, we'€™ve only been exporting 20 percent,'€ Miyazaki said.

Besides the new markets, the company also plans to export its products to other Southeast Asian countries because of the high demand for caustic soda and PVC for infrastructure projects.

Without detailing current demand, Asahimas predicted demand for its products would double by the end of 2020. At present, Southeast Asia represents the biggest market for caustic soda and vinyl chloride.

The firm plans to add 300 skilled workers, following the expansion, to its existing 1,000-strong workforce.

Asahimas also plans to apply for a tax allowance, which would reduce its taxable income by up to 30 percent of overall investment realized for six years, as stipulated in a 2011 government regulation on income tax allowances in certain industries.

'€œA tax allowance is a greater incentive for sizable investment than a tax holiday,'€ Benny added. (nai)