Overview
The government of Indonesia will continue to offer natural gas prices below USD 6 per MMBTU for seven industrial groups, include fertilizer, petrochemical, oleochemical, steel, ceramic, glass, and rubber glove sectors. The plan to expand the low gas prices to all industrial sectors is still under review. Industry Minister, Agus Gumiwang Kartasasmita, noted that expanding the policy to all industrial sectors would not burden the state budget or reduce revenues, as industrial gas needs are only 30% of the national supply, emphasizing the low gas price program has positively impacted investment, exports, and employment in the industry.
President Jokowi also approved the plan for a domestic supply obligation of natural gas of 60% for domestic manufacturing and electricity needs. To date, the obligation to supply or provide gas for the manufacturing industry is not strictly regulated, resulting unsustainable gas supply for industry from fields managed by cooperation contract contractors, leading to uncontrollable pricing to almost double the mandated US$6 per MMBTU.
The government of Indonesia also decided to permit industrial parks to build LNG regasification infrastructure and procure LNG from abroad, simultaneously tasked Pertamina to expand LNG regasification facilities across Indonesia, granting the necessary permits to support Pertamina in developing gas infrastructure. By allowing industrial park developers to directly import LNG, the government aims to create a more competitive and flexible energy market, potentially lowering costs and improving energy security.
Latest Update
- Frisian Flag Builds Its Largest Factory in GIIC
- FrieslandCampina and Frisian Flag Indonesia (FFI) inaugurated its newest plant in Greenland International Industrial Center (GIIC), to meet the growing domestic demand for milk. The groundbreaking ceremony was held in 2021, targeting a completion in 2023, but construction was finally completed in July 2024.
- The new plant sits on a 4 Ha of land, with estimated investment of €257 million or around IDR 3.8 trillion, was claimed to be the largest investment of the parent company FrieslandCampina worldwide as well as FFI’s third plant in Indonesia (other facilities are located in Pasar Rebo and Ciracas).
- The new plant will process 400,000 kilograms of fresh milk daily to produce 700 million – 1 billion kilograms of dairy products annually. This facility also serves as a hub for FrieslandCampina’s product distribution throughout Southeast Asia.
- FFI has made efforts for an environmentally friendly innovations throughout the production chain. These include biomass boilers for steam power generation, wastewater recycling facilities for water management, and solar panel roof systems.
- In collaboration with the Indonesia Food Security Review, FFI holds a CSR Program around GIIC called Nutritious Food Program, a program that aims to increase student’s nutrition targeting 10 schools in Cikarang reaching more than 2 thousand students every day until December 2024.
- Hyundai LG Indonesia Green Power Factory Inauguration in KNIC
- Hyundai Motor Group through a JV with LG Energy Solution (LGES), under PT Hyundai LG Indonesia (HLI) Green Power inaugurated the first phase of the battery cell factory located in Karawang New Industry City (KNIC)
- The project began in September 2021, was finally completed on July 3, 2024, with a total investment of USD1.1 billion, aiming production of 10 GWh of battery cells.
- This 31.9 Ha battery cell factory is deemed as the biggest in ASEAN. The plant has a production capacity of up to 50,000 units of Battery System Assemblies for battery based EVs that will be used in the latest Hyundai Kona.
- The second phase is under construction from January 2024, with commercial production targeted to begin in March 2025 with a production capacity of 20 GWh. The investment value of the second phase is USD 2 billion.
- The battery cell factory is part of Korean’s commitment in building EV ecosystem in Indonesia. Tracing back in 2020, LG Energy Solution (LGES) a consortium consisting of LG Energy Solution, LG Chem, Huayou, LX International, Posco Future M and Indonesia Battery Corporation (a consortium of state owned PLN, Pertamina, MIND ID and Antam), has signed an MoU with the Indonesian government towards a USD 9.8 billion investment for the establishment of a battery production and its material for electric vehicles, including plans to build three production facilities in state-owned Grand Batang City Industrial Park (KITB), as part of its USD 9.8 billion investment in 2020. However, no significant progress could be found with regards to this plan.
- Lotte Chemical Factory in Cilegon City
- Amidst the inauguration of HLI’s largest battery cell factory in KNIC, the government monitors the progress of PT Lotte Chemical Indonesia’s New Ethylene Project (LINE Project) in Cilegon City.
- South Korean chemical giant Lotte Chemical signed an MoU with the Indonesian government to build a large-scale petrochemical complex worth around USD 3.9 billion and started the construction in 2022.
- The LINE project will be constructed with the help of Lotte Chemical Titan, subsidiary of Lotte – formerly Titan Chemicals before it was bought by Lotte in 2010, which is one of the largest producers of polyolefin in Southeast Asia, which has production site in Malaysia consisting of twelve plants, two co-generation plants, and three tank
- Lotte Chemical targets production in March 2025, and aims to generate over USD 2 billion of annual revenue. Once complete, the petrochemical complex will annually produce 1 million tonnes of ethylene, 520,000 tonnes of propylene, 250,000 tons of polypropylene, as well as 17 other downstream products such as butadiene, benzene toluene xylene, etc.
- The production of PT Lotte Chemical will be a substitute for a number of chemicals that have been imported by Indonesia, targeting 70% production to meet domestic demand and the remaining 30% will be exported.
- Eramet and Huayou Explore EV Nickel Partnership in Indonesia
- French miner Eramet SA, is exploring a partnership with Zhejiang Huayou Cobalt Co. to produce battery-grade nickel in Indonesia after a similar project with BASF fell through last month.
- Eramet Indonesian Director Bruno Faour stated that they are looking for opportunities to invest in exisiting HPAL nickel ore processing plants by partnering with companies that already have working smelters or are in the process of constructing them.
- Eramet is in talks for an ore supply agreement to a high-pressure acid leach (HPAL) plant run by the Chinese firm in the Indonesia Weda Bay Industrial Park, according to people familiar with the matter.
- Eramet is also considering taking a stake in the Huafei plant controlled by Huayou, which is the world’s largest HPAL facility. A spokesperson for Eramet declined to comment on the talks.
- The move underlines the difficulty that Western firms face in creating a supply chain of critical minerals free from Chinese Chinese companies have been able to build the plants far quicker and cheaper than their Western counterparts but have also faced concerns over how they manage the tailings with severe contamination risks.
- More Chinese-built HPAL plants — which process nickel ore for use in batteries — are set to come online in Indonesia in the coming years to meet rising demand from the electric vehicle sector. Huayou already operates two in the country, and is set to construct two more in partnership with Brazil’s Vale SA which are:
- Collaboration with PT Vale and global Ford Motor Company, in 2023, injecting capital worth IDR 67.5 trillion, to build a nickel smelter with HPAL technology at Indonesia Pomalaa Industrial Park (IPIP), Southeast Sulawesi, with commercial target in 2026. Huayou holds a majority stake, while PT Vale and Ford Motor Co. have the call option up to 30% and 17% respectively.
- Collaboration with PT Vale in Sorowako, South Sulawesi to process PT Vale’s low- grade nickel ore for a smelter project with HPAL technology.
- Upcoming Hazardous Waste Treatment Plant in PIER
- Vice-President of Indonesia, Ma’ruf Amin visited Pasuruan Industrial Estate Rembang (PIER) for the upcoming newly construction of hazardous waste in East Java at the end of June 2024.
- Located in PIER, PT Prada Tanara Pratama (PTP) is a new hazardous waste treatment plant that has an area of around 3,500 square meters. The company has offices in Jakarta and East Java, and works with SIER Surabaya as the parent of PT PIER
- PTP was built since March 2023, and per end of June 2024 the construction has reached 60 percent, aiming to start operation in August 2024. The hazardous waste treatment facility will apply the incineration method.
- The waste treatment capacity reaches 300 kg per hour per machine; with 4 machines, the capacity can reach an average of 18-19 tons/hour, totaling a capacity of nearly 200 tons per month when all machines are fully operational, according to the company’s Director of Operations.
- Governor of East Java Adhy Karyono hopes that the presence of PTP in Pasuruan will strengthen the industrial sector in East Java, providing benefits for hazardous waste treatment in East Java and absorbing labor from the surrounding community.
- NeutraDC Nxera Data Center Investment in Kabil Industrial Estate Batam
- Batam confirmed itself as one of the data centers in Indonesia, after Telkom Indonesia through its subsidiary NeutraDC Nxera Batam, will build the Neutra DC Hyperscale Data Center (HDC) in the Kabil Industrial Estate area, Nongsa, Batam.
- NeutraDC Nxera Batam is a subsidiary of PT Telkom Indonesia, in the form of a joint venture with Singaporean telecommunications company Singtel and Medco Power Indonesia. The investment value of the data center construction is IDR 4 trillion, and is currently entering the piling stage.
- The data center has three data center buildings or campuses, with a total area of up to 10 hectares, a capacity of 50MW, with an investment reaching IDR 1.5 – IDR 1.6 trillion, considered to be Telkom’s second biggest data center and the 5th data center that they have in the country, and is projected to be completed in the third quarter of
- NeutraDC Nxera Batam data center has infrastructure designed to support heavy AI workloads with high This data center adds to NeutraDC’s other locations in Cikarang and in neighboring Singapore, with Tier III and IV classifications.
- According to data, Malaysia and Indonesia are emerging as prime beneficiaries in ASEAN from strong global demand growth for new data centers amid AI proliferation, according to research house CGS-International.
- According to DC Byte, a data center market intelligence, data center capacity in ASEAN could increase by more than fourfold from 1,677 MW in the first quarter of 2024 to 7,589 MW by 2028.
- Malaysia, Thailand, and Indonesia is expected to deliver an outstanding 32 percent to 56 percent Compound Annual Growth Tate (CAGR) from 2023 to 2028, due to major movements from global company – Amazon, Microsoft, Google, and many more, to provide for clients who may require computing resources for AI development and
- Indramayu Regency Prepares 6 Areas for Industrial Park Development
- Indramayu Regency is well on its way to becoming one of the emerging industrial
- According to the Regent Nina Agustina, there are six areas that can be used as developing industrial areas in Indramayu Regency, which are Losarang, Sukra, Balongan, Cikedung, then Gantar, and Terisi.
- The Indramayu Regency Regional Spatial Plan (RTRW) allocates 14,000 Ha of land as a Kawasan Peruntukan Industri (KPI), which is ready to welcome industrial investors in Indramayu Regency.
- Indramayu Regency Government also conducted a comparative study to Batang KITB and other Industrial Park in Central Java to enhance its understanding in Industrial Park development.
- 3 Lido SEZ Project Targets Completion in Second Half of 2024
- Established through Government Regulation Number 69 of 2021, the Lido SEZ focuses on tourism and creative industry; has an area of approximately 1,040 Ha of land and is committed to realizing investments of up to USD 2.4 billion equivalent to IDR 32 trillion, absorbing 29,545 workers within 20 years.
- PT MNC Land Tbk (KPIG) is completing various projects in the MNC Lido City SEZ. In the second half of 2024, there are three projects that will be inaugurated, namely Trump International Golf Club-Lido, Trump Residences Lido, and Hyatt Regency Lido.
- KPIG will hold a soft launch of the luxurious 18-hole World Championship standard golf course, Trump International Golf Club-Lido in the third week of July 2024.
- Trump Residences Lido which will go on sale in October Trump Residences Lido is an elite and luxurious villa in the SEZ.
- Hyatt Regency Lido will be opened in the fourth quarter of this year.
- Land Bank Authority Collaborates with Japan’s JTrust Group
- The Land Bank Agency collaborates with JTrust Group to develop Penajam Eco City in East Kalimantan as a buffer zone for the nation’s Head of the Land Bank Agency Land Bank, Parman Nata Atmadja, said the development of Penajam Eco City was carried out on an area of 1,000 Ha of land, located in North Penajam Paser Regency.
- The cooperation with JTrust Group including banks and consulting, is considered as the first milestone to attract Japanese investors.
- Through the cooperation, JTrust Consulting will introduce potential Japanese investors who are interested in investing in the Penajam Eco City JTrust Group through its subsidiary, JTrust Bank, could provide financing facilities for investors.
- Currently, the Land Bank Authority’s total managed land is recorded at 18,758 Ha around the country, including Penajam Eco City. The Land Bank also aims to add 23,000 Ha of new Right to Manage(HPL) by 2024, totaling 41,758 Ha.
- Chandra Asri Plans BTX Plant for Pharmaceutical Sector
- IDX-listed petrochemical firm PT Chandra Asri Pacific aims to develop a BTX (benzene, toluene, xylene) plant soon to bolster support for the pharmaceutical industry.
- Edi Rivai, External Affairs & Circular Economy Director of Chandra Asri Group, said “We are fully integrated from upstream to downstream in the petrochemical sector, with almost all segments of the petrochemical chain processed, except for We hope to build a BTX plant in the near future to cater to the needs of the pharmaceutical industry”. No specific details were disclosed.
- Chandra Asri has commenced the construction of a US$1 billion chlor-alkali and ethylene dichloride (CA-EDC) plant in Banten Province.
- Looking ahead, the company plans to produce bio-avtur from used cooking oil in the future, targeting a 1% reduction in aviation emissions through biofuel.
- Chandra Asri recently achieved International Sustainability and Carbon Certification (ISCC), underscoring its capability to meet global standards for processing bio- feedstock into various bio-based products, including bio-propylene, bio-ethylene, and bio-Crude C4.
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