Lotte still at odds with Indonesian residents over chemical factory construction

Lotte Group Chairman Shin Dong-bin, front row left, inspects the construction of a petrochemical complex in Cilegon, Indonesia, in this August 2022 file photo. Courtesy of Lotte Group

By Park Jae-hyuk

Lotte Chemical still seems to be having a tough time settling a dispute with the residents of Cilegon city in Indonesia, where the Korean conglomerate has invested over $4 billion to build a giant petrochemical complex, under the project name, “LINE,” which stands for Lotte Chemical Indonesia New Ethylene.

The Southeast Asian country's news outlets reported recently that over 5,000 residents in the city will surround the construction site to hold a rally from Tuesday to Thursday in protest against Lotte Chemical's breach regarding its promise to offer jobs to local residents and share the profits from the project with traders there.

The protesters also reportedly urged Lotte Chemical to dismiss a Korean public relations officer.

“We will contact our employees at the site to figure out what is going on,” said a Lotte Chemical spokesman at its Korean headquarters, acknowledging the company's lingering disputes with Indonesian residents.

In 2019 and 2020, Lotte Chemical drew complaints from Cilegon residents, who claimed that the company's construction project caused floods and air pollution.

Although the Korean firm has emphasized its efforts to prevent natural disasters, the residents even held a rally last year.

Against this backdrop, the chemical company aims to complete the LINE project by 2025.

Lotte Group Chairman Shin Dong-bin also expressed his keen interest in the project, visiting the construction site last August.

The chairman had previously sought to start the project in the early 2010s and then begin operating the factory from 2016. However, his plan faced a setback, due to a delay in negotiations with the Indonesian government and the chairman's conflict with his older brother over control of the group.

The project was suspended in 2018 as the chairman was imprisoned for allegedly giving bribes to former President Park Geun-hye.

In 2020, the COVID-19 pandemic forced the company to postpone the selection of the company to deal with engineering, procurement and construction (EPC) for the project.