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Dispute over Lotte Chemical's US$4.2b plant resolved
INDONESIA on Friday said a land dispute over a US$4.2 billion investment by the local unit of Lotte Chemical has been settled, clearing the way for the completion of the South Korean firm's naphtha cracker plant.
The dispute has been a major hurdle to the construction of the plant by PT Lotte Chemical Indonesia in the port city of Cilegon, situated in the northwest of Java island, for the past three years, Indonesian Investment Coordinating Board (BKPM) chief Bahlil Lahadalia told a news conference.
"When I became the head of BKPM, there was a (total of) 708 trillion rupiah (S$69 billion) investment potential that hadn't been realised, including this US$4.2 billion by Lotte," said Mr Lahadalia, who has been President Joko Widodo's investment chief since October.
Mr Lahadalia said he had helped resolve some of the problems but some 500 trillion rupiah of investment plans were still facing "land, location permit, financial closing and environmental study problems".
Land disputes and permit complications are common issues for investors in Indonesia, though Mr Joko is introducing a sweeping bill to improve the investment climate next month. The bill will revise 82 overlapping laws and allow the government to operate a land bank allocating space for investment.
Part of the 60-hectare (148.26 acres) plot of land where the Lotte Chemical plant is to be built was controlled by state steel-maker Krakatau Steel, but was claimed by another individual, according to local media reports.
With the dispute settled, Lotte Chemical should be able to finish construction by 2023, Mr Lahadalia said after the signing of an agreement between executives from Lotte Chemical and Krakatau Steel.
Lotte Chemical broke ground for the plant, which will have a production capacity of 3.5 million tonnes of naphtha, last year, media reported.
Details of the settlement were not disclosed, although Krakatau Steel's chief executive, Silmy Karim, said it included lease and sale deals. REUTERS