Incentives formulated for integrated petrochemical industry

Jakarta (ANTARA News) - Indonesias Ministry of Industry has prepared a number of incentives for integrated upstream and downstream petrochemical industries in an effort to increase the added value and contribute towards the economy.

"The downstream industrial products will have added value of up to UDS$500 thousand per ton if we can make it integrated," Director General of Manufacturing Industry Base Harjanto said here on Wednesday.

Speaking at the Refining & Petrochemical Innovation Conference, Harjanto said Indonesias chemical industries have yet to achieve their maximum production potential. This is because US$300 million worth of raw materials required for production are still imported.

He said that the upstream industry must be reinforced because many by-products from the chemical industry could be utilized by downstream industries, thus adding value.

Harjanto said the upstream petrochemical products in Indonesia included polyethylene, polypropylene and styrene monomer butadiene. About 14 other products could also be developed.

The development of an integrated upstream industry needs a huge investment while, typically, it is an industry with slow yields, and needs sweeteners to make it attractive.

Investors will not be attracted if the indicator of investment worthiness, such as the International Rate of Return (IRR), is still below 12.

Vice President of PT Chandra Asri Petrochemical, Corporate Relations, Suhat Miyarso said the plan of state-owned oil and gas company Pertamina to build eight refinery plants for petrochemicals in 2016 will help create integrated upstream industries.(*)