Indorama to invest US$2bil in US as tariff talks go on

The Star

29-04-2025

JAKARTA: A company rooted in Indonesia is slated to invest US$2 billion in a blue ammonia project in the United States as part of what President Prabowo Subianto called a 'win-win solution' in the ongoing tariff negotiations.
Coordinating Economic Minister Airlangga Hartarto (pic), who led a top-tier Indonesian delegation to Washington, DC, for bilateral talks last week, revealed in a press conference on Monday (April 28) that Indorama, a diversified manufacturing company, would make the investment in the US state of Louisiana.
He added that the US project had reached the front end engineering design stage, which is a planning phase one step on from the feasibility study.
Airlangga noted that Indorama was already operating on US soil in the production of polyethylene terephthalate (PET), the most common thermoplastic polymer, which is used for packaging as well as for food and beverages containers, among many other products.
'Indorama is a multiproduct company. It started in Purwakarta and has expanded to various countries, including the US. In the US they have a PET facility, [where they make] bottles for soft drinks,' said Airlangga after making his first report to the President following his visit to the US.
His team, which also included Finance Minister Sri Mulyani Indrawati and Foreign Minister Sugiono, kicked off talks expected to take up to 60 days and aimed at averting steep import tariffs that the US has threatened to impose on Indonesian-made products.
According to its website, Indorama Corporation was established in Purwakarta, West Java, in 1975 as a cotton yarn spinning business. The company has since expanded to the production of polyester fibre, PET and ammonia, among other goods, with operations in numerous countries, including Turkey, Thailand, Nigeria, Uzbekistan, India, Malaysia, Senegal, Nigeria, Brazil and Georgia.
Airlangga did not explain what might happen to Indorama's investment should the bilateral negotiations fail to satisfy the two parties. Airlangga presented Indorama's investment as part of Indonesia's package of concessions to the US, alongside exclusive tariff cuts for the benefit of US companies, deregulation and an offer to import more American-made products to balance out bilateral trade in a bid to placate the White House to avert exorbitant tariffs that the US has characterised as a 'reciprocal' measure.
Indorama has not immediately responded to The Jakarta Post's request for comment.
Airlangga said Indonesia had made a 'fair and square' offer to bump up imports of US products by 'more than US$19.5 billion', which would go beyond the US$18 billion by which Indonesian exports to the US exceeded imports from the US last year.
Prabowo said earlier this month that the archipelago could import more wheat, soybeans and cotton, alongside liquefied petroleum gas, oil and oil drilling machines from the US. The bilateral negotiations with the US are to continue over the next two months with the aim of concluding them well before the 90 days US President Donald Trump has granted trading partners to come to terms with Washington.
Airlangga revealed that critical minerals were discussed in the talks but refrained from divulging more details. Indonesia is the world's largest producer and holds the biggest estimated reserves of nickel, a key material for most of the batteries used in electric vehicles built by US-based carmaker Tesla Inc.
Over the past weeks, the minister has refused to specify what the archipelago is asking of the US in the negotiations, but he disclosed in the press conference that the delegation was lobbying for equality.
'For Indonesia's main export commodities to America, Indonesia requests that our tariffs be equal with [those imposed on goods from] other countries, be they Vietnam or Bangladesh, so that we get an equal, level playing field,' said Airlangga.
The reciprocal tariffs imposed by the US, but suspended for 90 days to allow for negotiations, vary from one country to another. Bangladesh and Vietnam are subject to rates of 37 and 46 per cent, respectively, both higher than the 32 per cent to be imposed on Indonesia.
Much like Jakarta, Dhaka and Hanoi are engaging with Washington to try and avert the tariffs, which would make their goods much less competitive in the US, the world's largest consumer market.
Airlangga said the government has formed three new task forces to 'expedite the negotiations' on investment and trade and to deal with economic security, domestic employment and deregulation.
Speaking to the Post on Monday, Centre of Economic and Law Studies executive director Bhima Yudistira deemed Indorama's investment as a significant move and added that each investment made by Indonesian companies in the US could serve as a bargaining chip for Jakarta in the negotiations.
BCA chief economist David Sumual concurred, telling the Post on Monday that Indonesia's offshore investments had mainly concentrated on emerging markets of the Global South, like China, as well as African and Middle Eastern countries.
He went on to say that the key to negotiating with Washington was less about trade balancing deals and more about aligning with US strategic interests, like industrial reshoring, which could be done through investment on US soil.
'That [investment] is what Trump really wants, which is why he uses tariffs as a negotiation tool rather than quotas,' David said, explaining that Trump's real goal was to kick-start US reindustrialisation, which was a key interest for his electoral base in labor-intensive industries that had seen mass layoffs.
He added that US allies, such as Japan and Taiwan, appeared to have recognised that offering investment was the key to pleasing Trump and that Indonesia's request for equal tariffs was the 'correct' tactic in the dealmaking process, the idea being that, if other countries succeed in reducing or eliminating US tariffs imposed on them, Indonesia should be afforded the same treatment.
Bank Permata chief economist Josua Pardede said Indorama's US investment plan could be considered part of a package offer, 'for example, buying ammonia from a project in the US to support the growth of a sustainable fertiliser industry in [Indonesia].'
The move showed a willingness on the part of Indonesia to invest in strategic sectors that could improve industrial relations between the two countries, he said. 'Thus, Indorama's investment signifies mutually beneficial economic diplomacy,' Josua told the Post on Monday. - The Jakarta Post/ANN