Michelin invests in €324m Indonesian rubber plant

ERJ staff report (TP)

Jakarta − Indonesian petrochemical producer Chandra Asri Petrochemical and French tire manufacturer Michelin plan to develop a $435m (€324.2m) synthetic rubber plant in Indonesia, reported The Jakarta Globe.

The plant will be run by a joint venture called Synthetic Rubber Indonesia (SRI), of which Chandra, through its unit Petrokimia Butadiene will own 55 percent stake and Michelin 45 percent.

“This initiative demonstrates Michelin’s long-term commitment to Indonesia,” Jean-Dominique Senard, chief executive and general managing partner of Michelin Group said in a statement on 5 November.

The plant will produce polybutadiene rubber with neodymium catalyst and solution styrene butadiene rubber. All are important for the production of environmentally friendly tires. The products will serve domestic needs as well as those of export markets.

Chandra Asri president director Erwin Ciputra said construction of the plant is scheduled to begin in early 2015.

“We have scheduled a financial decision, with all preparations completed, for 2014. Construction should commence in early 2015, so that it can be functional in 2017, with a production capacity of 120 thousand tonnes per year,” Erwin said.

“The existence of SRI is expected to have a positive effect on the Indonesian economy by reducing import of tire manufacturing essentials and to increase export of tires,” he added.

Erwin also added that Chandra and Michelin seek to secure tax incentives, such as a reduction on income tax and a tax holiday.

Indonesia’s corporate income tax currently stands at 25 percent of total earnings.

The government has set a policy that allows investors in projects of more than Rp 1tn (€66.4m) to apply for a tax break, the benefit of which would be exempted for at least five years and a maximum of 10 years.

Chandra and Michelin’s investment came as Indonesia’s automotive industry keeps growing, thanks to the growing middle class and a price war between manufacturers, which has led to consistently cheaper cars.

Indonesia recorded 1.1m in car sales in 2012, and is on course to meet that figure again for this year.

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Full story from The Jakarta Globe