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13 February 2010

Korean firm injects $200m into Indonesian textile plant

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South Korea-based textile and garment manufacturer Sae-A is building an integrated textile plant with an investment of $200 million in Jatiluhur, West Java, to support the company’s expansion in the Indonesian market, the Jakarta Post reported.

Indonesian Ambassador to South Korea Nicholas Dammen said the plant would have dying and knitting units and occupy a 60-hectare site in Jatiluhur, about 2-hours’ drive from Jakarta.

“The investment [amounts] to $200 million. [Construction] has begun and the operation will begin in January,” Nicholas said recently. “Once the factory is fully operational, it could employ up to 15,000 workers.”

As a first step, Sae-A will build the dying factory, which could employ around 2,000 workers, Nicholas said. He also said the company would use raw materials from the domestic market, instead of importing materials like many other South Korean companies.

“But it also has asked for guaranteed gas supplies to the plant, because the plant needs clean energy for its operation,” he said.

The domestic market has suffered from ongoing gas shortages because a larger portion of gas production is exported in the form of liquefied natural gas (LNG).

Nicholas said Sae-A is the largest textile and garment manufacturer in the world, with factories worldwide, including in Latin America, North America and throughout Asia, including in Vietnam and Indonesia.

In Indonesia the South Korean giant operates two factories, both in West Java, he said.

A total of around 10,000 workers are employed at the Purwakarta and Sukabumi factories, Nicholas said.

Investment Coordinating Board (BKPM) chief Gita Wirjawan could not be reached to confirm the figures.

Industry Ministry textile industry director Arryanto Sagala said he had no knowledge of Sae-A’s latest investment.

“If that’s true, the government can offer them our machinery-restructuring program, under which they can obtain a 10 percent discount [on new machines],” he told The Jakarta Post.

However, Arryanto also said that previously South Korean investors’ had left workers when they went bankrupt.

Echoing Arryanto, Indonesian Textile Association (API) deputy chairman Ade Sudrajat said while he had not heard about the new plant, he welcomed it.

“With an investment of that size… they will no doubt absorb a large number of workers,” he told the Post.

Ade also welcomed Sae-A’s plan to use local raw materials, because hundreds of South Korean garment makers already operating here tended to import raw materials, he said.


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