KT&G to expand production facilities in Indonesia

KT&G Corp., South Korea's dominant tobacco company, said Monday it plans to expand its production facilities in Indonesia, with an aim to start operations in 2026.

KT&G currently has a tobacco manufacturing plant in Surabaya and plans to build another one in the Southeast Asian country.

The new Indonesian plant will serve as KT&G's "manufacturing base" in Southeast Asia for exports to neighboring and other countries, the company said in a statement.

The Indonesian government said it will provide all-out convenience and support for the investment project, the statement said.

KT&G said the scale of investment and other details will be decided later and all investment-related decisions will be put up for vote by the company's board.

The Korean tobacco firm aims to earn half of its sales from overseas businesses in 2027. It targets to achieve sales of 10 trillion won in 2027, compared with 5.9 trillion won in 2022.

While focusing on the conventional cigarette business, the company said it will reinforce its heat-not-burn (HNB) and health functional food product businesses.

HNB products are electronic devices that, unlike e-cigarettes, contain tobacco. The tobacco is heated to a high temperature without setting it alight and creating smoke that the user inhales.

KT&G has exported its HNB products to more than 30 countries since 2020 through the sales networks of the New York-based PMI.

The company earns 90 percent of its overall sales from the cigarette business division and the remaining 10 percent from the HNB division.

KT&G has four tobacco manufacturing plants, one each in South Korea, Russia, Turkey and Indonesia, whose combined capacity amounts to 13.6 billion cigarettes a year.

Source: Yonhap News Agency

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