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| Indonesian President Joko Widodo, center, poses with Lotte Vice Chairman Hwang Kag-gyu, second from left, and Lotte Chemical CEO Kim Gyo-hyun, left, at the Lotte Hotel Seoul, Monday, after meeting chief executives of Lotte affiliates. Hwang said the construction of Lotte Chemical's petrochemical complex in Indonesia has been suspended because of Lotte Chairman Shin Dong-bin's detention. / Courtesy of Lotte |
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| Lotte Chairman Shin Dong-bin |
Lotte Group has suspended a plan by its chemical unit to invest 4 trillion won ($3.5 billion) in Indonesia, due to the current imprisonment of group Chairman Shin Dong-bin, Lotte's No. 2 man confirmed Monday.
During the Indonesia-Korea Business and Investment Forum in Seoul, Lotte Vice Chairman Hwang Kag-gyu told reporters that the construction of a petrochemical complex in the Southeast Asian country cannot be resumed, until the chairman visits the site after being released.
Lotte Chemical, the conglomerate's petrochemical business arm, has pushed ahead with the construction of a giant petrochemical complex in Indonesia, since it bought the land from the state-run Krakatau Steel last year. However, the project has been at a standstill since Shin was arrested for allegedly giving bribes to former President Park Geun-hye, who is also behind bars.
"Due to the internal matter, many of our businesses including those in Indonesia have been suspended," Hwang said.
His remarks are in stark contrast to what he said during his meeting with Indonesian President Joko Widodo, who visited Seoul this week.
During the meeting, Hwang and chief executives of Lotte affiliates introduced the conglomerate's businesses in Indonesia and discussed mutual cooperation with the country. Lotte Chemical CEO Kim Gyo-hyun also attended the meeting.
"As we have pushed ahead with cooperation with Indonesia in terms of investment in infrastructure, culture and startups, I ask the Indonesian government to pay attention to us and support us," Hwang said to Widodo.
Since the opening of Indonesia's first Lotte Mart store in 2008, Lotte has run 11 affiliates including Lotte Department Store, Lotte Chemical and Lotte GRS in the country, creating 9,000 jobs.
However, Lotte will unlikely make additional investments in the country for a while, due to the absence of the top decision maker, who has also served as the chairman of the Korea Indonesia Partnership Council's business sector.
Hwang urged the court to make a wise decision in an appeals hearing for Shin next month, so as to resume Lotte's halted businesses.
In addition to its businesses in Indonesia, Lotte has postponed its decision on M&A deals with a Vietnamese confectionary firm, a Southeast Asian retailer, a hotel chain and a European chemical company.
Although Hwang and the heads of business units have participated in an emergency management council since the chairman's arrest, they have been unable to make any important decisions except for the sale of Lotte Mart stores in China.
This is not the first time that the risk of the Lotte owner has thwarted massive investment.
In 2016, Lotte Chemical gave up its acquisition of U.S. chemical company Axiall, after prosecutors began investigating the owner family on embezzlement charges.
Lotte and Hyundai Heavy Industries are the only two of the top 10 conglomerates that have yet to come up with any investment plan under the Moon Jae-in administration. Other conglomerates have announced large-scale investment and employment plans.
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