Chandra Asri is on its own

Chandra Asri is on its own

JAKARTA (JP): The government will give neither tariff
protection, tax incentives nor regulatory protection to the
country's first olefins plant, the Chandra Asri Petrochemical
Center, Minister of Industry Tunky Ariwibowo announced yesterday.

"As already known, import tariffs on chemicals similar to
Chandra Asri's products remain at zero percent, as stated in the
revised tariff book issued on May 23," Tunky said after reporting
to President Soeharto at the Merdeka Palace here.

Soeharto is scheduled to inaugurate PT Chandra Asri
Petrochemical Center's olefin plant in Anyer, West Java, on
Saturday.

Asked whether it was possible that Chandra Asri would be given
tax incentives or supporting trade regulations from the
government, Tunky replied: "No."

Last year, the company asked for tariff protection against
imported olefin products. The call sparked vigorous public debate
involving economists, legislators, company executives and
ministers. State Minister of Investment Sanyoto Sastrowardoyo,
for instance, supported the request, while Minister of Finance
Mar'ie Muhammad came out against it.

The company's chief executive officer, Peter F. Gontha, said
last week that as his company's products are not protected, they
are vulnerable to dumping on the part of foreign producers.

Minister Tunky promised yesterday that the government will
intervene if the company faces unfair competition, including
dumping practices, from foreign producers.

"However, we must prove it, if dumping is indeed being carried
out... Where there are unfair trade practices we will certainly
intervene," Tunky said.

Chandra Asri is jointly owned by the Napan, Barito Pacific and
Bimantara groups -- all believed to wield strong political clout
-- and Japan's Marubeni Corp.

The company's olefin plant has the ability to convert about
1.5 million tons of naphtha into 550,000 tons of ethylene,
243,000 tons of propylene and 216,000 tons of pyrolysis gasoline.

Chandra Asri's propylene is to consumed by PT Tri Polyta
Indonesia's polypropylene plants, which are also located in
Anyer. Tri Polyta is a public company whose shares are listed on
the Nasdaq exchange in New York.

Chandra Asri's pyrolysis gasoline is to be exported, mainly to
Japan.

Chandra Asri itself will use some 300,000 tons of its annual
ethylene output for its integrated polyethylene resins plants,
while the rest will be available for local companies.

On Monday, Chandra Asri clinched its second long-term ethylene
off-take deal with PT Styrindo Mono Indonesia, a polystyrene and
synthetic rubber manufacturer. Under the deal, Chandra Asri is
required to supply Styrindo with at least 15,000 metric tons per
annum during the next five years at prices discounted from
prevailing international prices for ethylene.

Last week, Chandra Asri announced its first long-term sale to
PT Yasa Ganesha, an ethylene glycol manufacturer, under a five-
year contract for on annual off-take of 24,000 metric tons of
ethylene.

Late last year Sanyoto said that Indonesia's downstream
chemical plants and dozens of middlestream plants imported olefin
products worth between $1.2 billion and $1.9 billion each year.

Tunky said yesterday that, with the operation of Chandra
Asri's olefin plant, the country would save between US$600
million and $700 million per annum in olefin products not
imported.

At the same briefing to journalists, Tunky said that President
Soeharto will be the keynote speaker at the World Economic Forum
this year, which will be held in Singapore from Sept. 21 to Sept.
27.

He said the forum, which will be attended by over 500 top
executives from large companies worldwide, will serve as an
excellent venue to promote Indonesia as "a good place to do
business." (rid)

Editorial -- Page 4