Indonesia's Len Industri, Singapore's Sunseap set up JV to produce solar power modules


August 22, 2015

Indonesian State-owned electronics company PT Len Industri and Sunseap Enterprises Pte Ltd of Singapore have signed an agreement to establish a joint venture company, called PT Len Sunset Energy.

The joint venture company will produce solar power plant modules with a capacity of 50 megawatts peak (MWp) in Batamindo Industrial Area in Batam, Riau Islands Province.

The joint venture company plans to start production by the end of 2015. The company is expected to develop renewable energy sources to generate electricity for the community. The two parties agreed to set aside initial investment of $5 million to develop a solar manufacturer with production capacity of 50 MWp. The production capacity will be increased gradually to 200 MWp.

For the initial stage, a total output of 30 MW-peak (MWp) will be sold in the global market through Sunseap's distribution network. Meanwhile, the 14MWp will be absorbed by Sunseap and its subsidiaries, and the remaining 6 MWp will be absorbed by Len and its subsidiaries.

“This is our effort to support the government in generating electricity through renewable energy sources by tapping into the great potential of solar energy in Indonesia," Commissioner of PT Len Sunseap Energy Arifien Habibie said in a statement.

He added,"The establishment of the joint company is one of Indonesia's strategies to increase capacity in the solar energy business and an effort to get into the global market. Such efforts would at the same time increase the competitiveness of the domestic module product in terms of price and certification."

The targeted markets are public and private solar power plants as well as the Asia-Pacific regional market. This is also the first investment from Singapore in Indonesia following the Indonesian president's recent visit to Singapore, Habibie said.

The partnership with Sunseap Enterprises is expected to strengthen the position of Len as a company with a business line in renewable energy in Indonesia, as well as open up export opportunities for solar modules within the ASEAN and Asia-Pacific regions, Commissioner of PT Len Sunseap Energy Arifien Habibie said.

“Batam was chosen as the location of the joint venture company given its strategic location and adequate infrastructure and facilities. “Batam is ideal for a business location as it is strategic in terms of transportation lines, facilities, and population," Habibie said.

Len Industry is a strategic state-owned enterprise engaged in the development of renewable energy, a railway transport system, information and communication systems, defense control and electronics systems, and a navigation system. Meanwhile, Sunseap Enterprises Pte Ltd is one of Singapore's solar power generation system providers.

Previously Len has signed an agreement with Newstar Energy International Pte Ltd (NEI) of Singapore and Ahcof International Development Co Ltd of China to develop an optic fiber cable plant in Technopark in Subang, West Java.

President director of Len Industri Abraham Mose said the purpose of the development of the plant was to meet the growing demand for fiber optic cables in Indonesia and in the Southeast Asian region, which has been in line with the growth of information and telecommunication industry in the region.

He said the fiber optic plant is scheduled to be operational by early 2016. The fiber optic plant will be built on 2,500 square meters of land.

Under the deal, Len will prepare land for the plant and deal with regulations and licensing issues, NEI is in charge of constructing the plant and finding domestic and overseas buyers, while Ahcof will be in charge of supplying machines and production equipment as well as raw materials.

PT Len Industri was established in 1965. It produces defense electric products, railway signals, traction, navigation and telecom equipment, solar cells and others.

Len and its partners compete with existing fiber optic cable producers, like PT Prysmian Cable, PT Jembo Cable Tbk, PT BICC Berca Cable, PT Communications Cable, PT Furukawa Optical Solutions Indonesia, PT Voksel Electronic Tbk and PT Sumi Indo Kabel Tbk.

Indonesia has become an attractive market for telecom equipment suppliers, triggered by the government's program to deploy optical fiber cables throughout the country as well as the increasing demand for fiber optic from private sectors.

Demand for optical fiber cables are expected to continue to grow in the future partly due to the increasing use of bandwidth required by 4G services.

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