Lotte Group Acquires Two Ailing Indonesian Petrochemical Companies


DECEMBER 26, 2017

Jakarta. South Korean conglomerate Lotte Group has acquired two ailing Indonesian petrochemical companies in an effort to strengthen its presence in the industry.

Through a local unit, Lotte Advanced Materials, the company bought Arbe Styrindo and ABS Industri Indonesia, both of which ceased operations in October due to financial hurdles, South Korean Yonhap News Agency said on Thursday (21/12).

The companies produced polystyrene, a synthetic resin used in the household and automotive industries.

Lotte plans to revamp and reopen  the factories by 2019, increasing their production capacity by 70,000 metric tons from 40,000 tons, and expecting a revenue of $185 million.

Lotte is aggressively investing in Indonesia's retail, processed food, construction and petrochemical sectors. The group has 12 affiliated companies in the country, which together employ 8,000 people.

It is estimated that the group's total investment in Indonesia reaches $1.2 billion.

Lotte expects to book a revenue of 2.5 trillion won ($233 billion) this year.

Lotte's Other Investment

Industry Minister Airlangga Hartarto, said the group, through its local petrochemical unit Lotte Chemical Titan, plans to build a $4 billion naphtha cracker plant next year.

The facility will produce 2 million tons of olefin, ethylene and propylene, and will be built on 40 hectares near the company's existing petrochemical plant in Cilegon, Banten.

The plant in Cilegon has a production capacity of 450,000 tons of polyethylene per year.

"We urged them to quickly materialize the plans, as we need to meet the demand for raw materials, so that we do not need to import them," Airlangga said, adding that the project will take about four years to complete, and will provide employment to 9,000 people.

"In the construction phase they will employ about 6,000 people and when it starts operations, it will take 3,000 people," he said.

With the total capacity of Lotte and Indonesia's biggest petrochemical producer Chandra Asri Petrochemical, the country is able to produce 3 million tons of chemicals a year, making it the fourth largest producer in Southeast Asia, after Thailand, Singapore and Malaysia.

To diversify its revenue, Lotte Group has launched a new online shopping website, iLotte, which offers fashion, beauty, health care, sports, and food and beverages products. The $100 million service operated by Indo Lotte Makmur is set to compete with local e-commerce companies such as Lazada, Tokopedia and Bukalapak.

The company is now establishing its distribution centers in Indonesia.