Samsung Group, South Korea's largest company, plans to develop a 25,000-hectare oil palm plantation and a biodiesel refinery in Riau province with an investment of up to Rp 15 trillion (US$1.63 billion).
Head of the national team for biofuel development Al Hilal Hamdi said Monday the company had spent Rp 1.5 trillion on acquiring the land and the factory.
"They bought the land recently and that was their first investment. The total investment will likely increase by 10 times," he said, refusing to reveal the exact location of the land.
He said the Samsung factory was expected to go online next year and produce 50,000 kiloliters of biodiesel per year.
"Samsung is one of many investors interested in taking part in the country's biodiesel development project in Sumatra," he said.
However, Indonesia-based Kang Hyonghyun of Samsung C&T Corporation said he had yet to be informed of the plan.
As of March 2008, bio-energy development investment in the country had reached Rp 31.47 trillion.
To reduce dependency on fossil fuels, including oil, the government will in October impose a new regulation requiring that at least 2.5 percent of fuel consumed by manufacturers be biofuel.
The first law will initially be enacted in Java and Sumatra only.
Indonesia produces two types of biofuel -- bioethanol, made from cassava, sugarcane and sorghum; and biodiesel, made from castor and crude palm oil.
The country's annual biofuel production is currently 2 million kiloliters and is expected to grow to 5 million kiloliters by 2010.
The country's annual bioethanol production capacity reached 192,349 kiloliters as of the end of the year's first half. This figure is expected to increase to 4 million kiloliters by 2010.
Samsung's business operations include electronics, engineering, construction and shipbuilding.
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