Kumenindo to set up petrochemical plant in W. Java

Kumenindo to set up petrochemical plant in W. Java

JAKARTA (JP): PT Kumenindo Kridanusa, a consortium of six
companies headed by Fadel Muhammad, will set up a cumene-based
petrochemical plant in Balong Indramayu, West Java next year,
which is expected to start production in early 2000.

"Our production capacity will be 160,000 tons of cumene (raw
material for making high-grade plastics) per year," Fadel
Muhammad, president of the Bukaka Group, said here yesterday.

He was speaking to reporters after he and the U.S. Ambassador
to Indonesia, J. Stapleton Roy, signed an agreement on a grant of
US$206,000 from the U.S. government through the U.S. Trade and
Development Agency to Kumenindo Kridanusa.

Fadel, who is chief commissioner of Kumenindo Kridanusa, said
that the new petrochemical company will use the grant to fund a
feasibility study on the petrochemical plant project.

The study, which will cost $206,000, will be conducted by M.W.
Kellogg, a U.S. engineering consultant company, and is expected
to be completed in August.

"Hopefully, we can start the development of the plant early
next year," he said, adding that it usually takes three years to
develop a mid-stream chemical industry.

He pointed out that Kumenindo is still open to foreign
investor participation.

At present, it is a consortium of six companies owned by six
young businessmen. Fadel's company, the Bukaka Group, is among
the six. He declined to identify the other companies.

Fadel said that many foreign investors have already expressed
an interest in joining.

"Several experienced petrochemical companies from the United
States have already expressed an interest in joining Kumenindo in
petrochemical development," he said. He refused to identify the
American companies.

Asked about the total investment that will be needed for the
plant, Fadel said that he could not yet give an exact amount,
because he has to wait for the results of the feasibility study.

But Don Bernard, M.W. Kellogg's representative in Indonesia
observed that, based on the experiences of other countries, a
plant with this capacity will need an investment of between $300
million and $400 million.

Fadel said that Kumenindo will get its raw materials from
local sources. "We are checking into the possibility of getting
propylene from Chandra Asri," he said.

The Chandra Asri olefin center, the first in the country, is
located on West Java's western coast.

Kumenindo's end products will be high-grade plastics, which
are in strong demand by many industries, including the
manufacturers of automobile parts. The high-grade plastics used
in Indonesia are currently imported.

Asked whether the establishment of the company is related to
PT Timor Putra Nasional's plan to produce a national car called
"Timor", he said, "We had planned this project long before the
government announced the national automobile program.

"We will sell our products to all companies that require them.
This includes Timor Putra Nasional, but also others," he said.
He added that his company manufactures the products for both
export and the local market.

Recently, Fadel said that Hutomo Mandala Putra, the youngest
son of President Soeharto and owner of Timor Putra Nasional, had
agreed that the Bukaka Group would supply car components to Timor
Putra, which will start its car production later this year. (13)