Italian-based turnkey oil and gas contractor Saipem International has begun construction of a massive fabrication yard in Karimun, Riau Islands, with a total project investment of Rp 2.5 trillion (US$271 million).
During the launch ceremony of the ground-breaking facility Friday, Saipem offshore general manager Yves Inbona told the press the yard would be the company's largest production facility of its kind.
Occupying some 140 hectares of land, the facility would have a production capacity of 30,000 tons of oil and gas related components.
"The production facility will be one of the company's largest. Products from here will be allocated for demands in Indonesia as well as for neighboring areas," said Inbona, adding the company expected the facility to start operations in 2010.
He said Karimun Island was chosen to house the facility due to its free-trade zone status.
The company, which plans to employ 5,000 workers, has requested local administration improve business infrastructure on Karimun, including highways, power capacity and ports to help boost the operation's efficiency.
Riau Islands governor Ismeth Abdullah said the project signaled the revival of foreign direct investments in the province.
In a bid to lure more foreign investment into the country, the central government is planning to grant Batam Island, Bintan Island and Karimun Island special economic status whereby various business facilities there will benefit from free-trade.
Batam is located around 30 minutes from Singapore by ferry.
Ismeth said the administration decided to make Karimun Island a center for maritime business due to its deep water access that can accommodate large vessels, making it ideal to serve as a shipyard and offshore production facility.
"We are confident more and more international companies will come to Karimun to construct production facilities, especially those related to maritime and offshore businesses," he said.