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Interview

with Jae Yong CHOI, Chief Representative, TOYO Engineering Jakarta Office

24.08.2012 / Energyboardroom

Can you give us a brief historical overview of the main milestones and achievements since Toyo Engineering settled in Indonesia?

We are currently involved in a number of projects, mainly on our fertilizer sector, with ammonia and urea project in Kalimantan. We had two great achievements since 2010, as we were awarded two more projects recently.The first one is butadiene for the Chandra Asri plant, and the second one is a polymer project in Cilegon. Last year we were awarded three projects as well. Personally, I have been very lucky as there have been some significant milestones for Toyo Engineering in the past couple of years, since I came here as a representative of Jakarta office.We are now very busy focusing on the support of the ongoing operations, and we also work on future proposals as we are always seeking new development opportunities.It is very nice to be based in Indonesia, as it is a booming and competitive market, with a lot of new actors entering the country, and this is a great opportunity for me to learn more about how to do business and project management in such a challenging environment.

Toyo Engineering is a highly diversified company with interests across key areas such as pharmaceuticals, food and beverage, automobile: how significant is the Oil and Gas activity of Toyo Engineering in Indonesia?

We have many different business units among our global operations but in Indonesia, our main business is focused on the petrochemical and fertilizer. We have constructed successfully so many fertilizer plants and we happen to be very strong in Indonesia. There is an ongoing proposal to extend our activities in this sector, as we believe it is a very promising market. We have managed to build deep relationships with state-owned fertilizer clients so this has become our most significant business. We are also working on refineries and infrastructures but we can easily say that 100% of our revenues originated from Indonesia come from the oil and gas industry.

Toyo Engineering has an impressive portfolio of operations in 5 continents. Based on your own assessment and the international experience of the company, how would you describe the Indonesian operating environment? In which areas does Indonesia still have most catching up to do with international standards?

One of the main challenges when doing business in Indonesia is the Authority approval. It is often a rather time consuming process that can generate delays in operations. We are sometimes requested to operate projects on a very short period of time but authority approvals can slow it down a bit, for instance with issues concerning import customs or construction permits.There are some other obstacles that foreign companies can encounter in Indonesia such as the local content clauses but we manage to overcome this challenge because we are very close to Indonesian companies. Localizing is one of the priorities of our strategy. Historically we have been doing very well with local companies. We believe that harmonizing with the local enterprises is the most significant key factor to conduct successful business here. Last year we achieved a very important milestone in that regard with the decision to acquire a major share in a local company called IKPT.

How would you define your partnership with IKPT in terms of know-how and technology sharing, and what was the vision behind this strategic investment decision?

Considering the future trends of the Indonesian market, there are more and more requirements for foreign companies to localize. Generally, local companies that are capable to handle such large-scale oil and gas projects are rare. In the past we used to select our local partners project by project. But as more foreign companies are entering the oil and gas market, the number of candidates participating in tenders versus the number of actual opportunities is unbalanced. In order to build an advantage and be privileged in this competitive environment, we decided as a marketing strategy, to team up with a local company on a permanent basis. However, we are not collaborating with IKPT for all the projects, as we are quite flexible with partnering with other local companies to share expertise when needed.

What is the significance of the Asia-Pacific market for Toyo Engineering and where do you see the potential?

Historically, the Asia Pacific market is very important for Toyo because it accounts for more than 30% of our global revenue. We have achieved a very good network thanks to companies with whom we had great relations with, and clients who were satisfied during past projects.Indonesia accounts for about 40% of the Asia Pacific, so it is a key market for us. Toyo has most of its Urea technology and network in Indonesia. Fortunately for our company, there will be a high demand of fertilizer in the near future and we forecast a growth of fertilizer demand in Indonesia as well, so it is really a strategic location for us.

Toyo engineering recently won the tender to build the Chandra Asri plant and you have already won tenders to work with Pertamina the past few years. What would you define as your main competitive advantage and what makes you the partner of choice in this competitive market?

Our main strength lies in the fact that we do very systemic and planned project execution in pursuit of on-time or earlier completion), delivery is our main competitive edge, and we provide high quality in all the services and operations we undertake. Our philosophy is that once we get committed, we deliver, and deliver it well.On all the projects we are working on, we are also very supportive for all the work that needs to be done afterwards, and if one of our clients has a problem, we provide all the support needed in maintenance. We are very flexible and we can easily provide solutions and advice, given that we are a knowledge-based company. This is another significant advantage for our clients because they know that we are committed on a long-term basis.

Safety and quality are key issues in the oil and gas & fertilizer industries. What is Toyo’s policy in that regard and how significant are safety and quality among Toyo’s operations?

“Safety first” is our motto. When we conduct a project, our managers always educate our workforce based on an everyday training. We believe it is a major concern, and we never compromise on safety. Our managers conduct daily meetings with the whole staff to emphasize the importance of safety. Sometimes when we fell that we need to reinforce the message, we hire an Indonesian safety officer that speaks to the employees in Bahasa Indonesia. We are a global company, but we like to act local.

Toyo Engineering celebrated its 50th anniversary last year. Birthdays are always a good opportunity to look back at what has been achieved and set new goals. Where do you see the company in the near future? If we come back in 5 years, what will Toyo Engineering Indonesia ideally look like?

We want to dominate the fertilizer industry in Indonesia. The population & economic are growing in Indonesia and the demand will increase. There are many plants to be built and we want to spread our urea technology and demonstrate that we are quite superior in that sector, in terms of technology and project management. We also want to move to the upstream sector thanks to our partnership with IKPT. In terms of revenue, our ambition is to achieve double-digit growth.

As a final message to our readers, what would be your piece of advice to the executives and managers that are outside Indonesia about what was the biggest challenge that you have had in Indonesia and what do you think is the key factor to be successful in this country?

Indonesia is passing through a very active period of time because of all the new projects that have started recently. The country is growing and offering many oportunities to foreign investors. Nevertheless, in order to do business here the main virtue that anyone needs to have is patience. Also, business is done a lot through communications and strong relationships with the clients and companies need to be flexible. We communicate very much with our partners and this is a competitive advantage at the end of the day.We are in Indonesia as a potential partner for investors wanting to discover the opportunities of oil and gas market.

We like to say something that sums up the business environment in Indonesia “No need to hurry, be patient, but do not give up and the efforts will pay off”.

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