Tableware producer asks for more gas supplies for planned investments

The Jakarta Post, Jakarta

British tableware producer Royal Doulton has asked the government to resolve recent problems concerning gas supplies to the nation's ceramics industry against the backdrop of the company's plan to invest another US$28 million in Indonesia.

The issue has become a major consideration for the company in deciding whether to invest more in Indonesia's ceramic industry, Royal Doulton CEO Sir Anthony O'Reilly said after a meeting Wednesday with Vice President Jusuf Kalla.

Royal Doulton plans to invest between $25 and $28 million next year, which will add to its $75 billion investment so far in Indonesia, said Investment Coordinating Board (BKPM) chairman M. Lutfi, who had accompanied Sir Anthony during the meeting.

The new investment will be used to increase production to 12 million items at the company's existing factory in Banten, O'Reilly said.

The factory currently produces some $30 million-worth of porcelain tableware and other collectibles, of which 97 percent is exported. Royal Doulton has been investing in Indonesia since 1994, having made it its main production base, besides Bangladesh, India and the U.K. itself.

O'Reilly said that the local ceramic industry was competitive in the sense that it had a shorter production time of only 5 months, as compared to 15 months in the company's other production bases.

"Indonesian workers are also more skilled, producing higher quality products," he said.

O'Reilly, who had previously met with President Susilo Bambang Yudhoyono to discuss Royal Doulton's business plans here, said that Kalla had given assurances he would strive to resolve the issue of gas supplies for the company's investment needs.

Indonesia's ceramics industry has been experiencing production glitches since earlier this month following a drop in monthly gas supplies of 42 million MMBtu from state gas utility PT PGN.

The situation has forced at least 10 major local producers, including Roman Ceramic, Luki Ceramic, Arwana and Kopin, as well as overseas investors such as Toto and Royal Doulton, to cut output or stop production altogether, Indonesian Ceramics Industry Association (Asaki) chairman Achmad Widjaya has said.

Exports by the local ceramics industry accounted for $288 million out of Indonesia's total industrial sector exports of $78 billion last year. The industry also employs some 30,000 workers.