Dealing A IDR 52 Trillion Investment Cooperation, Krakatau Steel And Posco Will Become The Biggest Steel Players In Southeast Asia

JAKARTA - Indonesia and South Korea (South Korea) are committed to strengthening the ecosystem of the steel and electric vehicle industries in Indonesia. This is marked by South Korea's investment through Posco to Krakatau Steel worth USD 3.5 billion or around IDR 52.2 trillion.

Minister of State-Owned Enterprises (BUMN) Erick Thohir positively welcomed Posco's investment plan. Erick assessed that the investment plan from Posco would further strengthen the vision of PT Krakatau Steel, a joint venture between PT Krakatau Steel and Posco to become the largest steel player in Southeast Asia.

This was conveyed by Erick while accompanying President Joko Widodo (Jokowi) to witness the signing of a memorandum of understanding (MoU) between the Indonesian Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia, President Director of Krakatau Steel Silmy Karim, and Posco CEO Kim Hag Dong in Seoul, South Korea, Thursday 28 July.

Erick said the cooperation was also in accordance with President Jokowi's directives to reduce imports of raw materials. Therefore, the signing of the MoU on strategic cooperation between Krakatau Steel and Posco in the steel industry was witnessed directly by Jokowi.

"Of course, the MoU is a real step for SOEs in supporting the strengthening of the steel and automotive industry ecosystems in Indonesia," Erick said in an official statement, Friday, July 29.

Erick said that the investment value would be realized in the form of increasing automotive steel production capacity for the electric vehicle industry to the Nusantara Capital (IKN) project. Erick said, this collaboration also strengthens the integrated national steel ecosystem.

“Posco knows that we have large natural resources for the development of the electric vehicle industry, not to mention our large market. Indonesia is seen as having great potential to become a global player in this industry," he said.

In addition, Erick said, Posco also saw the success of the transformation of Krakatau Steel which successfully reversed the company's condition from loss to profit, from a conventional company to a modern one, and was even able to suppress imports, as well as strengthen the nation's resilience.

Posco, continued Erick, appreciated Krakatau Steel's transformation through debt restructuring, improved cash flow, efficiency, and good business processes.

"Imagine years, eight years of continuous losses, but last year Krakatau Steel was able to make a profit of IDR 800 billion," he said.

For Erick, increasing investment cooperation will not only strengthen the competitiveness of SOEs, but also be able to become a catalyst for economic growth. As a third of Indonesia's economic power, Erick wants SOEs to be at the forefront of improving the economy and creating job opportunities for the community.

“Of course, it will be meaningless if our natural resources and large market do not contribute to economic growth and job creation. This is a joint commitment between Krakatau Steel and Posco," explained Erick.