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.