MITSUBISHI TO INVEST US$1.5 BILLION IN PETROCHEMICAL INDUSTRY

Jakarta, June 9 (ANTARA) - Mitsubishi will build a coal-based petrochemical factory with an investment of US$1.5 billion in East Kalimantan, chairman of the Indonesian Chemical Industry Federation (FIKI) Hidayat Nyakman said.

"Up to now, Mitsubishi is the only company which is serious in making investment in the petrochemical industry sector while others have only expressed interest," Nyakman said here on Tuesday.

He made the remarks after attending a discussion on the outlook of chemical industry after the 2009 elections.

He said that the Japanese company had finished its feasibility studies on the construction of the factory, but it was still waiting for the government to provide support facilities to ensure continuity in the factory's operation.

"They are still waiting for the government's support such as infrastructure and tax incentives," Nyakman said.

The petrochemical factory, according to plan, will be built on a 37-hectare plot of land but Nyakman did not indicate the location where the factory is going to be built.

Nyakman said the Mitsubishi's factory would make the same products as the integrated petrochemical factory of PT Chandra Asri, but the scale of its production would be smaller than Asri's.

PT Chandra Asri produces upstream and intermediate chemical products.

He said that Mitsubishi was also still waiting for coal supply certainty for its raw material need. It needed 10 million tons of coal as raw material to produce petrochemical products.

"Indonesia has big potentials for petrochemical investment as it is rich in raw materials such as oil, gas and coal reserves. But the government's support such as infrastructure and tax incentive is still very small compared with that of other counties such as Malaysia, Thailand and Singapore," he said.

Nyakman said the cost of petrochemical factory construction in Indonesia was high because companies willing to invest in this sector had to develop infrastructure facilities such as roads, ports and electricity generators themselves.