JAKARTA. PT Lotte Chemical Indonesia and PT Krakatau Steel (Persero) Tbk (KRAS) has signed a memorandum of understanding (MoU) as a solution to the delay of Lotte Chemical's US$ 4.2 billion investment to develop a plant in the Cilegon industrial area, which had been hampered by a land dispute for the past three years.
The MoU was signed by Lotte Chemical Indonesia CEO Kim Yong-ho, Krakatau Steel CEO Silmy Karim, and Krakatau Industrial Estate Cilegon President Director Priyo Budiyanto. Also in attendance was Head of the Investment Coordinating Board (ICB) Bahlil Lahadalia.
According to Mr Lahadalia, Lotte Chemical's investment was delayed due to the planned plant's location on land whose management rights are owned by Krakatau Steel. "There were issues with land permit. I was asked to resolve the dispute upon joining the ICB," said Mr Lahadalia at a press conference on Friday (13/12).
Out of total investment value of US$ 4.2 billion, US$ 850 million will be allocated for the development of the plant in 2020. The rest will be allocated in 2023 when Lotte Chemical commences production from the plant.
Mr Lahadalia claimed that neither Lotte Chemical, Krakatau Steel, nor the state was damaged by the MoU signing. The dispute settlement also involved the Attorney General's Office.
The ICB is confident that Lotte Chemical's investment will help lower Indonesia's trade balance deficit because the company's plant will substitute several imported materials that support production. "Any industry that provides import substitutions will help our trade balance," said Mr Lahadalia. (KR/MS)