Kogas, Lotte to invest $14b in Indonesia

By Febry Silaban

South Korea?s energy giant Kogas and chemical firm Lotte Chemical Corp have expressed commitment to investing a total of US$14 billion to build gas infrastructure and petrochemical plant in Indonesia.

Both firms signed the memorandum of understanding (MoU) on the investment commitment on Monday during President Joko Widodo?s state visit to the country. The President is in South Korea from May 15 through 18.

Franky Sibarani, Head of the National Investment Coordinating Board (BKPM), who is among top officials who accompanied the President during the visit, said in a statement that Kogas, which is well known in Indonesia as a loyal customer of Indonesian LNG industry, plans to invest a total of $10 billion to build massive gas infrastructures in Indonesian starting this year.

?The investment commitment includes the MoU worth $600 million signed by Kogas and PDPDE Sumatera Selatan,? Franky said. PDPE (Perusahaan Daerah Pertambangan da Energi) Sumatera Selatan is a state owned firm owned by the South Sumatra provincial administration.

Meanwhile, Lotte Chemcials, a subsidiary of conglomerate Lotte Group, is ready to develop a petrochemical plant with an investment of $4 billion.

Franky explained Lotte started doing petrochemical business in Indonesia in 1987 through PT Indofatra Plastik Industri. In 2013, Lotte renamed the firm into PT Lotte Chemical Titan Tbk and now claims to be the largest in Indonesia in terms of polyethylene capacity with an annual capacity of 450,000 tons.

Aside from both firms, the President also received investment commitment worth $4 billion from several other companies during the visit.

The investment commitments expressed during the visit are as follows:
- CJ Group: Investment commitment worth $2.1 billion in poultry feed and film industries
- Komipo in partnership with Indonesian firm PT Mega Bali Energi plan to invest $140 million for waste-to-energy project
- Daewoong Pharmaceutical is committed to investing $100 million in bio pharmaceutical raw materials
- Parkland is committed to investing $83.5 million footwear industry
- Posco is committed to increasing the capacity of its steel factory up to 10 million tons
- Kogas in partnership with PDPDE Sumatera Selatan will build a $600 million gas transmission from Tanjung Api-Apil to Bangka Island
- Korbi in partnership with Indonesian firm PT Coffindo wlll invest $100 million to develop a solar farm with an investment of $100 million
- Komipo, Posco Engineering in partnership with local firm PT Sulindo Putra Timur will invest $230 million to build a hydropower project in Southeast Sulawesi
- Komipo, Samtan in partnership with Indonesian firm PT Indika Multi Energi Internasional and Japanese firm Marubeni will invest $1.27 billion for the expansion project of PLTU Cirebon power plant.

While speaking during the business forum of South Korean firms, the President underlined that the stability of Indonesian currency and economy in general becomes the main attraction of Indonesia to foreign investors

?The government is also in the middle of deregulating the economy to facilitate investment by local and foreign firms,? the President said at the ?Moring Tea with President Jokowi? at Crystal Ballroom, Lotte Hotel in Seoul Monday morning.

Editing by Johannes Simbolon