ASEAN urged to establish petrochemical plant

ASEAN urged to establish petrochemical plant

Urip Hudiono, The Jakarta Post, Jakarta

The Indonesian Olefin and Plastics Industry Association (Inaplas)
is proposing that members of the Association of Southeast Asian
Nations (ASEAN) jointly build a petrochemical plant for the
region, similar to their fertilizer plant in Aceh.

The plant, the proposal for which will be submitted by Inaplas
at the ASEAN Federation of Plastics Industries (AFPI) meeting
next week in Thailand, is expected to fulfill the region's
increasing demand for the raw materials for manufacturing plastic
products, while also raising the region's competitiveness in the
global plastics market.

"I think this is better than having each country build its own
plant to fulfill its own domestic demands," said secretary-
general Budi Susanto Sadiman on Wednesday, during a one-day
seminar on the association's strategies for the future.

Explaining the plan further, Budi said that the plant was
expected to produce annually one million metric tons of ethylene
and 1.5 million metric tons of propylene.

Ethylene and propylene, continued Budi, could further be
processed by the same plant into polyethylene and polypropylene,
the main raw materials for plastic products.

Demand for polyethylene and polypropylene in the Asia-Pacific
region reached 18.1 million metric tons and 15.3 million metric
tons respectively, last year, while their production was only
17.4 million metric tons and 15.1 million metric tons.

Indonesian demand for polyethylene was 578,000 metric tons and
for polypropylene 741,000 metric tons, while its production was
only 445,000 metric tons and 475,000 metric tons respectively.

Demand for the two products is estimated to increase by an
average of 5 percent per year until 2008, according to Inaplas.

Regarding the plant's location, Budi proposed it be in an
Indonesian oil-rich region like East Kalimantan, as the
production of ethylene and propylene required adequate supplies
of naphtha or natural gas condensates.

"We are also considering a location in Tuban, East Java," said
Budi, referring to the site of a petrochemical plant planned
since 1999 but not constructed.

Budi, however, could not give exact figures on the total
investment required for the plant, or an assurance that the
proposal would be accepted.

Besides proposing an ASEAN petrochemical plant, Inaplas has
set up a US$380,000 electronic information and commerce portal
for the association's current 120 members, as part of its future
strategy.

"We plan to increase our membership to 2,000 by the end of
this year," Budi said, while adding that currently 6,000 plastics
industry companies exist in the country.

Inaplas also reiterated its request that the government
facilitate the industry in acquiring raw material and raise
import duty on plastic products to protect the domestic plastics
industry, particularly from China.