Enerco RPO Internasional, a subsidiary of Singapore-based Enerco Chemical, has signed an agreement with the Batam Indonesia Free Zone Authority (BP Batam) for the development of a rubber oil refinery in Batam, Riau Islands in Indonesia. The deal was signed at the Office of the Coordinating Economic Minister in Indonesia.
A newly established state agency tasked with managing and developing industrial areas in the island, BP Batam has permitted Enercoto build the rubber oil refinery plant in the region with a total investment value of Rp 1.3 trillion (US$98.8 million),with support from a government-sanctioned program to ease construction.
BP Batam will facilitate all licensing processes for Enerco under a government incentive program called the “direct construction investment incentive” (KLIK) in order to expedite the factory’s construction, according to the agency’s head, Hatanto Reksodipoetro.
“I’m working hard to make the permit process more efficient and we should accelerate the next steps to develop other infrastructure in the island, particularly the seaport and airport,” he said.
The 2.3-hectare site for the facility will be provided by local firm Kabil Citranusa, owner of the Kabil Integrated Industrial Estate (KIIE) in Batam.
The rubber oil refinery would become the country’s first and Asia’s biggest when it comes to the production of environmentally-friendly processed rubber oil, which is one of the raw materials used in the tyre manufacturing process based on international standards, according to Enerco RPO Internasional commissioner Hendro Sutandi.
Demand for high-quality tyres using new types of synthetic rubber have also increased due to global regulations that restrict tyres that are made using hazardous materials, he said.
The facility will have a total production capacity of more than 100,000 tonnes of treated distillate aromatic extract (TDAE) rubber oil per year with a technology owned by national private companies partnering with state-owned firms.
Enerco will also work with European engineering and manufacturing companies to construct the facility. The company will also partner with US-based Exxon Mobil to support raw material supplies from Singapore.
A partnership agreement,for the overseas marketing and distribution of the rubber oil products, has also been signed with Sumitomo Corporation Asia and Oceania Pte. Ltd.
The government welcomed the deal as no new investors had come to Batam in the past few years, said Coordinating Economic Minister Darmin Nasution. He also hoped that the deal would assist the agency in developing the area into a special economic zone (KEK) in the future.
He said the engineering process for the facility has already been prepared since October last year, so the process for procurement and construction could start soon in order to achieve the completion target next year.
“The selection of Batam for the facility construction is also based on the island’s tax-free zone and policies issued by BP Batam and the local administration to facilitate the permit process,” he said.
Batam, both an island and municipality in the Riau Islands, is home to more than 1 million people. Batam is also the third-largest city in Sumatra after Medan in North Sumatra and Palembang in South Sumatra.