Hartarto keeps door open to petrochemical investments
Hartarto keeps door open to petrochemical investments
JAKARTA (JP): Coordinating Minister for Production and
Distribution, Hartarto, said here yesterday that Indonesia still
had openings for investment in the petrochemical sector, but he
warned of increasingly tougher competition.
"The development of petrochemical industries in Indonesia is
strongly supported by a conducive business climate which
encourages investment," he said in a keynote address to a
conference on the Asia-Pacific Petrochemical Industry.
He said that abundant raw materials and competitive manpower
made businesses quite profitable here. An added advantage was the
stable social, economic and political climate.
"With a 200 million population, Indonesia will be a
considerable potential market," he said.
Hartarto's address was read by Kumhal Jamil, an assistant on
industry to the minister. About 200 people from Indonesia and
overseas attended yesterday's sessions of the conference
organized by S and A Petrokimia, a petrochemical consultancy.
Petrochemical products produced in the country are upstream
petrochemicals, plastic raw materials, synthetic fiber raw
materials, surfactant raw materials, coating raw materials and
plywood chemicals.
"These industries have been growing rapidly, and have made a
large contribution to the national economy," he said
He said that in 1989 there were 17 petrochemicals produced in
Indonesia. By the end of 1995, there were 33 petrochemical
products produced here.
In his speech, Hartarto said that other Asia-Pacific
countries, faced with increasing local demand, also looked to
expand their petrochemical industries.
"In a short time, it can be expected that competition in this
industry will become more severe," he said.
He said petrochemical industries were now moving from
developed countries to areas of cheap feedstocks, rapid growing
local consumption, and comparative advantage in the workforce,
like China, Indonesia, Malaysia, Thailand and the Philippines, to
produce consumer goods from petrochemicals.
He said petrochemical producers in developed countries were
facing slower growth rates, rapidly rising costs, increasing
competition at home and safety and environmental issues. Because
of this, producers had turned their attention to the Asia-
Pacific, especially East Asia.
About 70 percent of world chemical production still takes
place in developed countries, such as the United States, Western
Europe, Japan, Korea and Taiwan.
Vice president of the Indonesian Chamber of Commerce and
Industry, Fadel Muhammad, said that financial problems due to the
reluctance of local banks to enter the sector might hamper the
development of Indonesia's petrochemical industries.
"We see a lack of information in the sector that makes
(leaves) our businessmen here not quite familiar with the
petrochemical industries," he said.
"As a result, local banks are not yet interested in the
sector," he said. Fadel is also chairman of the Bukaka Group,
which has an interest in the petrochemical industry.
A director and senior consultant of the Singaporean company
AFKA Ltd, Jimmie Aung Khin, said Asia-Pacific countries needed to
find additional financial sources since international commercial
bank credit had contracted.
"There is a need in the Asia-Pacific for additional sources of
capital such as tapping local banks, multilateral agencies and
capital markets to finance Asian petrochemical and refinery
projects," he said.
Aung Khin said the World Bank had estimated that the total
investment requirements for downstream projects in Asia during
1995 to 2010 was about US$105 billion, nine percent of the total
Asia-Pacific energy project investment requirement of $1,227
billion.
He said a sizable petrochemical market, substantial capital
resources for investment and the availability of feedstocks were
the three main factors needed to support and sustain the
petrochemical industry.
In Asia the first two factors are available, but it has to
import a substantial percentage of the feedstocks. (bnt)