JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo met South Korean‘ leaders of the largest company like Chairman of CJ Group Kyung-shik Sohn, Vice Chairman of Lotte Group Kag-gyu Hwang, CEO of POSCO Choi Jeong-woo, and Vice Chairman of Hyundai Motor Company Chung Eui-sun on Monday (10/09) in Seoul.
Widodo arrived Sunday for a three-day state visit that reciprocated South Korean President Moon Jae-in’s state visit to Indonesia last year.
Foreign Minister Retno Marsudi in a written statement said, a number of important talks regarding cooperation in the field of investment were discussed between President Widodo and the four leaders. She said, they expressed their commitment to employ more Indonesian workers and increase technology transfer for the Indonesian side.
In the company statement released on Monday, the vice chairman of Lotte Group Hwang Kag-gyu stated in the meting with President Widodo they discussed ways to strengthen the bilateral ties. Hwang, who co-represents Lotte Corp., met the Indonesian leader in Seoul to brief the conglomerate’s businesses and seek further support.
Lotte Chemical Titan, the business group’s chemical arm, is pushing to spend 4 trillion won (US$3.55 billion) to producing naphtha cracker with capacity of 2 million tons per year. Naphtha cracker is raw material for producing ethylene, propylene and its derivative products.
Last year, Lotte Advanced Materials has purchased two Indonesian synthetic resin makers PT Arbe Styrindo and PT ABS Industri Indonesia. The two firms are the only two Indonesian makers of acrylonitrile butadiene styrene resin widely used in plastic parts in household goods, tech products and automobiles.
Lotte Advanced Materials said it will focus on normalizing the two plants‘ operation and boosting their combined annual production capacity to 73,000 tons from the current 40,000 tons.
Lotte’s goal is to begin commercial production at the facilities from 2019 and reach an annual revenue of 200 billion won and an operating profit of 15 billion won.
In May, 2018, Hyundai has established a joint venture (JV) with Artha Graha (AG) Network in Indonesia as a stepping stone in entering the commercial vehicle market in Indonesia and branch into the Southeast Asian market. The new JV will manufacture commercial vehicles, such as medium and large-sized trucks, in the facilities owned by the AG Network.
In addition, the newly formed JV is intended as a strategic export base for other countries around Indonesia and will begin full new market exploration. It is planned that the location of Hyundai Commercial Car Plant in Indonesia will be located in Industrial Artha Induatrial Hill in Karawang, West Java.
Indonesia Government wants to boost the economic cooperation with South Korea, the 3rd largest country investing in the manufacture industrial sector in Indonesia. South Korea’s firms have invested $7.5 billion in Indonesia for past five years, contributing up to 71 percent of total investment in said period. They absorb around 900,000 Indonesian workers.
Other sector, also seen as strategic to be developed, is steel industry, Indusrty Minister Airlangga Hartarto said. The Government wants to boost the development of steel industrial cluster in Cilegon, Banten province. This cluster is aimed to produce 10 million tons of steel by 2025.
“This sector is called as mother of industry as its products become main raw materials for other industry’s activities,” he stated.
State steel producer PT Krakatau Steel Tbk (IDX: KRAS) and Posco, a multinational steel-making company, have committed to support the development of 10 million tons steel cluster in Cilegon. Now, KRAS and Posco produce combined 4.5 million tons of steel.
The operation of HSM#2 plant by end 2019 would add 1.5 million tons capacity, making a total 6 million tons capacity. Cilegon steel cluster will produce steel rolls for construction, steel sheet for household equipment, ship, car, and high-quality steel sheet products.