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Lotte and Indonesia Investment Department MOU

Lotte Chemical and the Indonesian Investment Agency signed a memorandum of understanding on the 7th for a large-scale petrochemical complex development project. The signing ceremony was held online.

[Asia Economy Reporter Choi Dae-yeol] Lotte Chemical announced on the 7th that it has signed a business agreement with the Indonesian Investment Ministry to establish a large-scale petrochemical industrial complex. Lotte Construction and Hyundai Engineering, which signed the engineering, procurement, and construction (EPC) contract on the same day, will participate together.

This project, called the ‘LINE Project,’ is the first to install a Naphtha Cracker (NCC) facility in Indonesia. The total project cost amounts to 3.9 billion USD. Lotte Chemical, in a joint venture with its subsidiary Lotte Chemical Titan, aims to complete the mega petrochemical complex in Banten Province, Indonesia, by 2025. The complex will produce 1 million tons of ethylene, 520,000 tons of propylene, and 250,000 tons of polypropylene annually, with expected annual sales reaching 2.06 billion USD (2.4 trillion KRW), according to the company.

Lotte Chemical proactively anticipated the growth potential of the Southeast Asian market and the increasing demand for petrochemical products, acquiring Malaysia’s largest petrochemical company, Titan Chemicals (now Lotte Chemical Titan), at the end of 2010. Subsequently, to strengthen market competitiveness, the company has been promoting this project to build an NCC in Indonesia and complete vertical integration with the existing polyethylene plant.

The Indonesian government has agreed to reduce raw material import tariffs for Lotte Chemical. Import tariffs on equipment and materials for factory construction will also be exempted, and tax benefits will be provided. This is to successfully carry out the project and stabilize commercial production. Since Indonesia currently meets about half of its total petrochemical product demand through imports, the industry expects this to improve the local trade balance and lay the foundation for the development of the petrochemical industry.

On the same day, Lotte Chemical Vice Chairman Kim Gyo-hyun and Indonesian Investment Minister Bahlil Lahadalia held an online video conference to sign the business agreement, followed by the EPC contract. Vice Chairman Kim said, "This will strengthen Lotte’s global business competitiveness and create mutual strategic value such as Indonesia’s economic growth and job creation."

Minister Bahlil Lahadalia stated, "Once products are produced through the LINE Project, it will not only improve import-export performance due to import substitution effects but also positively impact Indonesia’s petrochemical industry and the overall industrial sector."

This content was produced with the assistance of AI translation services.