Indonesia’s investment direction

Indonesia

Daniel Loh, the president-director of BASF Indonesia, talks to TOGY about the growth potential of the Indonesian market, downstream developments and upcoming infrastructure projects. BASF operates in the Indonesian downstream manufacturing and petrochemicals sector.

• On stability: “What is needed for us to continuously innovate and invest in a country is consistent investment policy and government policies.”

• On development: “Infrastructure is also important and I see that moving in the right direction under the current government.”

• On market size: “We want to work in an environment where the market leads to opportunities, and Indonesia is a perfect example. We have the largest market in SE Asia and from a population standpoint, the third-largest after China and India.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Roberto Lorato below.

How much potential does the Indonesian market hold?
We intend to be here for a long, long time. We want to work in an environment where the market leads to opportunities, and Indonesia is a perfect example. We have the largest market in SE Asia and from a population standpoint, the third-largest after China and India. That in itself creates opportunity. What is needed for us to continuously innovate and invest in a country is consistent investment policy and government policies. I think that is going to be a key moving forward. Infrastructure is also important and I see that moving in the right direction under the current government. I think that is very positive. The government is also trying to make it more investor-friendly, which is a good direction, but we’d like to see that on a more consistent basis. Indonesia is moving in the right direction in infrastructure and consistent policies. The other part of it is also a skilled workforce, which is also moving in the right direction.
We are always looking for similar kinds of opportunities where we can bring in innovation and technology that helps to improve the local industry and the lives of the people here.

What are the key projects of your company in Indonesia?
Our closest raw material production sites are in Kuantan, Malaysia and Nanjing, China. For example, in Indonesia, where we have our polymer dispersion plant, the acrylic acid comes from Kuantan. Also, some of the raw materials come from the Nanjing plant as well. We have invested in Indonesia since 1976, and now have 4 production sites here.
The latest investment we had in Indonesia was in 2015, when we upgraded our home and personal care production plant in Cimanggis. That will increase the capacity of the plant and cater for the local halal market. At the same time, we are also continuously upgrading our other plants as well to cater for newer, more innovative products that cater to the local market demands at the moment, like the latest dispersions technology for paints, paper coatings and adhesives.

What opportunities are there for infrastructure projects in Indonesia?
I think this is a tremendous opportunity. Indonesia as a country is improving its infrastructure, improving its roads, connecting its islands and building ports, including deepwater ports and ports that can handle a high amount of shipping. The MRT [mass rapid transit] transport system is being improved as well.

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