Indonesian manufacturer, PT Chandra Asri Tbk (IDX: TPIA) considered to release as much as 7.17 billion shares in this year to finance the business expansion - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesian manufacturer, PT Chandra Asri Tbk (IDX: TPIA) considered to release as much as 7.17 billion shares in this year to finance its business expansion, said the company yesterday (01/16). No further detail the target funds from the rights issue.

But with the current price Rp9,500 a share, the producer could reap Rp68 trillion (US$4.86 billion). All the funds will be used to construct a new petrochemical complex owned by its unit, PT Chandra Asri Perkasa, in Cilegon, West Java.

The new project is estimating need investments worth of around Rp80 trillion (US$5 billion). Beside, rights issue, Chandra Asri also seeks a strategic investor to fund the project.

Last December, President Joko Widodo has inaugurated the new polyethylene plant owned by publicly listed company in Cilegon. The producer spent $380 million to build the factory with total capacity production 400,000 tons per annum.

With the addition from the new plant, the capacity production of the company increase to 736 thousand tons a year. In the same location, unit of PT Barito Pacific Timber Tbk (IDX: BRPT), now in the process to develop a second petrochemical complex.

The factory produces polyethylene which is a raw material for supporting infrastructure products and a number of other industries and is intended to meet the needs of the domestic industry.

“Because our imports in the petrochemical sector are still large, we expect that our continuous investment in this field must continue to provide space so that later there will be imports. The petrochemical ingredients are really stopped and we can actually export them,” said the president while giving a speech at the ceremony in Banten.

As is known, imports of oil and gas and petrochemicals for the needs of the national industry are still too large so that it weighs on the trade balance. Based on the data he received, the domestic needs of polyethylene as an industrial raw material reached 2.3 million tons a year, while the national production capacity for these raw materials has only reached 780 thousand tons.

“It means we still import 1.52 million tons. Don’t give opportunities like this to other countries. If we can make our own, why should we import?” he urged.

The construction of the new polyethylene factory is expected to increase domestic production capacity so as to reduce dependence on the import of these commodities. The head of state hoped that in the future the national industry will be able to produce all the petrochemicals themselves so that they can meet the needs of the domestic industry and even export to other countries.

“This is the importance of why I always convey investment and investment. Where should I go? Opening up as many jobs as possible which will help and contribute in moving the economic wheel, not only in Cilegon and Banten, but also our national economy,” said the Indonesian leader.

While, president director of Chandra Asri, Erwin Ciputra said, the polyethylene factory is expected to be an import substitution and save the country’ foreign exchange amounting to Rp8 trillion. He adds, the new factory has also received a tax holiday policy from the government.

He continued, the investment for the construction of the second petrochemical complex its expecting to increase the domestic capacity. The second complex will bring total capacity to eight million tons every year.

In addition to investing in this second complex, from 2005 to 2019, Chandra Asrihas also been realized an investment of Rp 28 trillion with various capacity expansion activities, debottlenecking and construction of a new factory.

Until the end of 2019, the composition of shareholders consisted of Barito Pacific 41.88 percent, Thailand’ SCG Chemicals Co. Ltd. 30.57 percent, Prajogo Pangestu 13.99%, Marigold Resources Pte. 4.75 percent, and public 8.81 percent.

US$1: Rp14,000

by Linda Silaen, Email: linda.silaen@theinsiderstories.com