JAKARTA (TheInsiderStories) – PT Kilang Pertamina Internasional (KPI), unit of PT Pertamina, signed a head of agreement with PT Chandra Asri Petrochemical Tbk (IDX: CAPC) to develop the petrochemical business in Indonesia, both said today. The purpose of the deal is to meet the domestic petrochemical needs, which are currently still imported or deficit.
“We have the Balikpapan, Balongan, Cilacap, Dumai RDMP (refinery development master plan). We will increase upstream and downstream cooperation so that petrochemical products in Indonesia can be competitive and become the leader in Asia,” said the CEO, Nicke Widyawati, in a written statement released on Thursday (08/27).
Based on the company program until 2026, she added, Pertamina have plans to build a petrochemical plant that will be integrated with its refineries dan ready to work together with Chandra Asri to develop a petrochemical refinery in the country.
Indonesia is targeting to bring in investment of US$31.5 billion in the chemical industry until 2023 in line with the government’ plan to reduce the imports by 40 percent. The government also expects to reap the benefits of several new chemical plants that are currently underway.
Currently, Southeast Asia’ largest economy has several large projects in the chemical industry such as expansion by Chandra Asri in Cilegon, Banten. The producer spent $380 million to build the factory with total capacity production 400,000 tons per annum.
Then, PT Titan Lotte Petrochemical Tbk (IDX: FPNI) with a $3.5 billion new petrochemical plant also in Banten, according to Muhammad Khayam naphtha cracking plant, industry ministry’ director-general of the chemical industry.
In addition, the coal gasification project of PT Bukit Asam Tbk (IDX: PTBA) in Riau Island and naphtha cracking plant in Balongan, East Java, by Pertamina and its Taiwanese partner CPC Corp. He expects several projects gives a major impact on the country trade balance until 2023.
“We have upgraded the incentive packages to become tax holidays and tax allowances. That is, our existing investors or companies are expected to expand new factories,” said Khayam, adding that chemical imports in 2023 could potentially decrease around 30 percent – 40 percent by the new productions.
As is known, the current value of chemical goods imports is more than $20 billion. Industry Minister Agus Gumiwang Kartasasmita has pledged to reduce imports of consumer goods and to promote import-substitution industrialization to reduce the country’s current account deficit, which has continued to increase in recent months because of the country’s sluggish exports.
Kartasasmita said he is planning to develop more economic and industrial areas and also looking to strengthen inter-ministerial coordination in a bid to remove bureaucratic hurdles in executing the government’ programs.
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