INDONESIA - The Indonesian Petrochemicals Sector.

The sector of petrochemicals and fertilisers in Indonesia has seen a positive turn-around in the past four years as the business has become more profitable. The country's biggest petrochemicals JV, Chandra Asri on stream since 1995, has become more profitable, after years of being uncompetitive and big losses.

Indonesia produces a variety of chemicals. Being an agricultural nation, it is the largest producer and consumer of fertilisers in South-East Asia. Big expansions through new grassroots ventures planned in recent years have been delayed or shelved, because the negative effects of Asia's 1997/98 financial crisis. But the capacity of existing fertilisers plants has been expanded and their demand for natural gas has caused Indonesia to lower LNG exports (see Gas Market Trends of this week's Review).

In one way or another, most of the shelved petrochemical projects have involved the family of former dictator Suharto, who had to step down in May 1998 amid violent riots by pro-democracy students and militants condemning his corrupt regime. Succeeding governments have been corrupt but not on the same scale (see who's who among the decision makers in next week's APS Review). Political uncertainty resulting from frequent incidents of violence has deterred foreign investors.