Dow’s original plan was modified to adjust to the government’s requirements and a new proposal was presented. According to the company, in order to ensure the success of the project, Dow and the government would have to support the project with their respective resources. The government would sell ethane and fuel gas to the project “at prices such that the venture could be economically competitive”, and provide local know-how and protection from import-competition. In turn, Dow would be responsible for the petrochemical technology, training, market development expertise, key expatriate staff, and financial resources.

Dow also emphasized some trading and economic factors that would constitute opportunities for the project. First, Indonesia represented

• Dow initially proposed to form a “Dow Venture” Company/Companies to manufacture ethylene and other petroleum derivatives. However, the government permitted a “Contract of Work”. Under such arrangements, the foreign firm provided all the funds and operated the project.

As a member of the Chemical team, I would emphasize the economic and social benefits that such project would bring to Indonesia. Previously discussed on this case study, some of the benefits would include foreign exchange savings and earnings, value added to hydrocarbons in Indonesia, employment, education, and local business opportunities. In addition, the Country would benefit with technological gains for operating the plants.

• Value added to hydrocarbons in Indonesia: Dow pointed that at full capacity the chemical complex would add an annual value of US $ 190 million to the hydrocarbons used as feedstock and fuel.

As a member of the Indonesian government team, I would focus on the economic aspects of the project. The issues would encompass the plant’s total costs and return on investment, the elements of risk involved on the project, trade relations (economic import/export interdependence), project efficiency, and potential growth rate on the domestic and world markets.

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