KT&G opens Indonesian plant to expand global output

KT&G has opened a new cigarette plant in Indonesia, lifting its annual production capacity in the country to 35 billion sticks and making it the company’s largest overseas manufacturing base.

The facility in Pasuruan, East Java, completes KT&G’s production network across five countries — South Korea, Indonesia, Russia, Kazakhstan and Turkey — as the company shifts more output overseas.

KT&G CEO Bang Kyung-man attended Tuesday’s opening ceremony alongside Adhy Karyono, secretary-general of the East Java provincial government, and Yoon Soon-gu, South Korea’s ambassador to Indonesia.

Built alongside an existing factory, the new plant has nine production lines with an annual capacity of up to 21 billion cigarettes. The existing facility can produce 14 billion sticks a year.

The expanded site will supply Indonesia and export to markets including Taiwan, Mongolia, Nigeria and India, strengthening its role as a regional manufacturing and export hub.

KT&G entered Indonesia in 2011 through an acquisition and now ranks fourth in the country’s tobacco market. Its brands there include Esse and the local label Juara.

To meet growing demand, the company signed an agreement with Indonesia’s Investment Ministry in September 2023 and began construction the following April. Test operations started in the first half of this year.

The expansion forms part of KT&G’s growth investment program launched in January 2023. Together with its Kazakhstan plant, completed in April last year, the Indonesian facility brings much of the company’s 2.4 trillion won ($1.8 billion) overseas capital spending plan announced in November 2024 toward completion.

KT&G’s factories in Indonesia, Russia, Kazakhstan and Turkey are expected to have a combined annual capacity of up to 65 billion cigarettes. The company aims to produce more than 60 percent of its output overseas by 2028.

“We have completed major overseas capital investments and established a five-point global production system with the Indonesian plant,” Bang said. “We will strategically utilize our domestic and overseas bases to improve profitability and strengthen our international business.”