MOSCOW (MRC) -- South Korea-based company Lotte Group's plan to build an integrated petrochemical plant is still hampered by land problems. Honam Petrochemical Corp., the core company of Lotte Group's chemical division, is planning to build a polyethylene and polypropylene plant worth USD5 billion in Cilegon, Banten, said Tempointeractive.
The plant's construction requires a land of 100 hectares and is expected to be completed in three to four years.
Panggah Susanto, Director General of the Manufacturing Industry Base at the Ministry of Industry, said that once Lotte's plant operates, petrochemicals' raw material imports--currently reaching USD6 billion could be reduced by 20 percent. Lotte has the potential to be receive a tax holiday because the company meets the criteria for the facility.
Lotte is looking for a local partner to build the plant. "We recommend them, if possible, to invite a local partner such as PT Pertamina (Persero) or another local partner," Panggah said. He said that in addition to meet the domestic demand for plastic raw materials, the plant's production will also be exported "to improve the competitiveness of the national petrochemical industry."
Domestic investment in the petrochemical sector is still considered attractive due to the growing domestic needs of plastic. The increase will be driven by the growth of food and beverage industry as well as the automotive sector; both are a major consumer of industrial plastics. In the export market, South Korea's growth of F&B industry as well as automotive also raised the demand for petrochemical products. Lotte Group's investment in Indonesia is also intended to respond to domestic need of the South Koreans.
As MRC wrote earlier, South Korean conglomerate Lotte Group is considering new petrochemical ventures in southeast Asia, including an investment in Indonesia that may top USD5bn (EUR3.6bn).
The Lotte Group currently has a presence in Indonesia via its subsidiary, Honam Petrochemicals, which acquired Malaysia’s polyolefin major Titan Chemicals in July 2010. Included in the acquisition was Titan’s Indonesian subsidiary - PT Titan Petrokimia Nusantara (TPN), which has a polyethylene (PE) production capacity of 450,000 tonnes/year.
MRC