Banten ready to accommodate chemical industry

Banten ready to accommodate chemical industry

By I. Christianto

JAKARTA (JP): Supported by its ideal topography, West Java's
Banten area has many advantages for various giant industries,
particularly petrochemical-related factories. No wonder numerous
giant industries like PT Krakatau Steel, PT Tri Polyta Indonesia
and PT Chandra Asri Petrochemical Center operate in this region.

Banten, some 80 kilometers west of the country's capital of
Jakarta, covers over 2 million hectares of land, about half of
the West Java province. It consists of four regencies: Lebak,
Pandeglang, Serang and Tangerang.

Most of the chemical industries are located in Cilegon,
Serang. There is also a big petroleum plant based in Merak (also
in Serang) which is run by the state-owned oil company Pertamina.
Meanwhile, Tangerang is home to various plants and factories.

Situated 15 kilometers southeast of Merak is the giant state-
owned Krakatau Steel. It was formerly a Soviet project, abandoned
and left to rust after the 1965 coup, then taken over by
Pertamina with the help of foreign aid. It is the biggest steel
producer in Indonesia, and, with an estimated investment of
US$250 million, one of the largest industrial projects ever
undertaken in the country. It took 20 years to design and bring
on line the massive complex.

Tri Polyta is a polypropylene manufacturer and is listed both
on the New York and Jakarta stock exchanges. It produces about
370,000 tons of polypropylene resins.

Nowadays, hundreds of other huge factories and industries are
operating in the Banten region, which also brags to having a wide
range of tourist attractions. Currently, Banten has over 30
seaports, most of them are jetties owned by private companies in
the business lines of propylene, oil and gas, detergent and other
related industries.

Considering a possible ineffectiveness of the jetties in
Banten, PT Kawasan Industri Jababeka Tbk., a publicly listed
industrial estate and housing developer, plans to build an
industrial estate in Cilegon. The company will spend hundreds of
mullions of dollars on the project.

The project's general manager, Thoufik Winardi, said that
Jababeka had obtained a license to develop the estate on 1,300
hectares in Cilegon.

"We have won the license to develop 1,300 hectares. Ground
breaking was carried out in 1997 to develop an initial project of
a 200-hectare plot," he said, adding that the industrial estate
would be better than existing ones.

He said the project was started with full support from the
local government.

"The industrial zone will be the first chemical industrial
zone," he said, adding that the ideal location of the project
gave it great potential as an industrial area.

He said that Cilegon had been a popular site for various
investors due to its location.

"About 70 percent of the end products of various industries in
Cilegon were marketed in West Java. Therefore, Cilegon is the
best location," he said.

Looking back to its history, Banten was the center of a
trading empire in the 16th century. It is the coastal area where
the Dutch first arrived to carry out trade.

Early traders from Europe and the Middle East were familiar
with this area as the traditional nautical gateway to Southeast
Asia and beyond. Commerce in Chinese ceramics, birds' nests,
spices, ivory and handicrafts transformed Banten into a thriving
seaport, and once it even rivaled Amsterdam in size and
importance. Today, the harbor is one of the main spots in Java.

Access to Banten has become very easy since the opening and
operation of the Jakarta-Merak toll road, which includes a 26-
kilometer toll road linking Jakarta and Tangerang, a four-
kilometer Ciujung toll road and 8.4-kilometer Serang toll road.
Though not all roads are adequate, this infrastructure totals
more than 100 kilometers in addition to common roads in the area.

In sea transportation services, Banten has the Merak port,
which can accommodate 20,000 people in crossing the Sunda Strait
to or from Bakauheni in Lampung, Sumatra.

Efficiency

However, many industries in Cilegon are in the aromatic-
related business line, in which they used oil-based raw materials
from Europe, Taiwan or Japan.

"The material is delivered from Singapore as the transit point
by using smaller container vessels to private jetties. This is
ineffective and costly since the jetties are not optimized every
day," Winardi said.

He said Jababeka industrial estate in Cilegon would have
integrated facilities, including a seaport which would promote
efficiency.

"The southern side of the area is situated right by the
Jakarta-Merak highway. The west part borders with the road that
leads to the planned Bojonegara port. And the north part is on
the coast of Java Sea," he said, noting the project's good
location.

"He said the project would be expandable to 2,000 hectares by
reclamation planned in a longer term.

A number of foreign investors have shown interest in operating
factories on the estate, but with the current political situation
in Indonesia, they just wanted to wait and see, he said.

"It's the government's duty how to convince foreign investors
to come to Indonesia and to show that the country is stable and
safe," he said.

He said that Jababeka was drafting the estate and studying any
environmental effects.

"We are now planning the design for a water treatment plant, a
waste management plant and shore reclamation," he said.

Group Jababeka manages a 1,573-hectare industrial estate and a
1,400-home residential area in Cikarang, West Java. About 70
percent of total industries in Cikarang are owned by foreign
investors.

Sociocultural

Winardi said that the project would not have any sociocultural
barriers though many experts were concerned that such development
projects had very little impact on the welfare of the Banten
people.

As a matter of fact, Banten comprises many impoverished
villages where people live under the poverty line. Development
projects have forced people to move to remote villages with poor
infrastructure, mainly in the southern part of Banten.

"There has been land appropriation, but the land was
nonproductive soil and few people lived there," Winardi said.

Actually, Banten has two faces. In the northern part of
Banten, such as in Cilegon and Anyer, large-scale mining and
tourism flourishes. In the southern part, also called old Banten,
economic development is almost stagnant, despite the great
potential for growth.

"Jababeka's chemical industrial estate project in Cilegon will
be an anchor to developing the surrounding area," Winardi said.

He said that Krakatau Steel, which had developed as a steel-
based industrial zone, was proof that such a project would not be
a problem for the society in Banten.

Immigrant workers, already flooded in the region, have not
caused social and cultural conflicts with the locals either, he
said.

"Banten people also welcome the improving tourism industry,"
he said.

The southern areas of Banten have incredible mining and agro-
industry potential, as well as tourist resources. In addition,
this part of the region has vast deposits of mineral resources,
including gold, coal, steel and bentonite.

Local people have been involved in the project development and
will be able to work in many industries when operating, Winardi
said.

He said that the newly approved Law on Regional Autonomy would
be an advantage for Banten area.

In April, the House of Representatives passed Regional
Autonomy Law No. 22/1999, which allows regional administrations
and legislatures to manage their own affairs as well increasing
their freedom and responsibility. The House has also approved the
Law on Intergovernmental Fiscal Balance to allow local
authorities to gain larger parts of state revenue from local
resources. Both laws will not become effective until one year
after the President's endorsement.