South Korean steelmaker POSCO will almost double its investment inIndonesia to $11 billion over the next five years, from $6 billion currently, Chief Economics Minister Hatta Rajasa said on Friday.
POSCO, the world’s fourth-biggest steelmaker, already has a multi-billion dollar joint venture with Indonesian state-owned PT Krakatau Steel, the country’s biggest steel producer.
“The additional investment is for further steel development – cold steel, for energy development and for smelters development,” Rajasa told reporters.
Earlier this year, the South Korean firm’s affiliate POSCO Engineering &Construction, formed a consortium to build two 300-megawatt power plants on Indonesia’s Sumatra island, worth around $1 billion.
A POSCO spokesman in Seoul said the South Korean firm has yet to make detailed investment commitments in Indonesia, and noted other partners would jointly invest in any projects.
Foreign direct investment in Indonesia stayed strong in the second quarter, showing the G20 member remained a magnet in a troubled globaleconomy and that changes in mining ownership rules are not cutting investor appetite.
Between April and June, total FDI rose 30.2 percent year-on-year to a quarterly record of 56.1 trillion rupiah ($5.92 billion), the country’s investment board said in late July.
The country got a boost at the end of last year when Fitch Ratings upgraded it to investment grade sovereign status on a par with India. But Europe’s debt woes and a series of Indonesian government moves to limit foreign ownership have unnerved investors.
New investment is key to achieving the country’s ambitious target of becoming a top 10 global economy by 2025 by selling more finished products rather than simply exporting raw materials, while improving its creaky infrastructure to achieve President Susilo Bambang Yudhoyono’s target of 7 percent annual economic growth.
(Reporting by Yayat Supriatna; Additional reporting by Hyunjoo Jin in SEOUL; Writing by Michael Taylor; Editing by Jonathan Thatcher and Richard Pullin)