JAKARTA – Indonesia offers investment opportunities in asphalt production worth up to $1.3 billion as the Southeast Asian countries plan to halt imports of the road material in two years, a top official said on Tuesday.
The country imported 95 percent of asphalt today despite sitting on huge natural asphalt reserves.
“I said in two years I will stop asphalt imports. Everything must be supplied from Buton Island,” President Joko “Jokowi” Widodo said when opening the BNI Investor Daily Summit 2022, Jakarta Convention Center on Tuesday.
Buton is an island off the southern coast of Sulawesi. Jokowi said the island held up to 662 million tons of asphalt deposits, enough to supply Indonesia’s need from 120 years.
“In the past, it was processed in Buton, but it stopped. It is said that imported asphalt is cheaper. So, what happens today is that 95 percent of our asphalt is imported,” he said.
Investment Minister and Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said several investors from Europe and Indonesia are interested in building an asphalt industry in Buton.
“God willing, there are several from investors, including European and Indonesian ones,” Bahlil said at the summit.
Today, the island produces around 100,000 tons of asphalt per year. Bahlil said that was still far from the government’s target of 5 million tons per year.
“But we will expand the Buton asphalt industry soon. Some investors have started coming in,” Bahlil, without naming any investors.
He said a production facility with a capacity to produce 500,000 tons of asphalt per year requires an investment of around Rp 2.5-3 trillion ($162-195 million).
To meet just half of the government target would mean an additional investment opportunity of around Rp 15-20 trillion, Bahlil said.
Indonesia used about 1.3 million ton of asphalt in 2019, mostly consists of petroleum asphalt, which was the residue of oil refinery. It imported petroleum asphalt worth $550 million that year, becoming the fifth largest importers.
Jokowi and Bahlil did not specify how Indonesia would halt the asphalt imports in two years.
Still, the plan added to a string of Jokowi’s initiatives to reduce the country’s stance on imported materials and improve the local \industry. In past few years, Indonesia has stopped nickel ore exports in favor of developing its own steel and electric vehicle battery industries.