KT&G starts Indonesian cigarette plant, its largest overseas production base
In short
KT&G held an opening ceremony on Oct 6 in Pasuruan, East Java, for a new Indonesian cigarette plant that brings its annual production capacity in the country to as much as 35 billion sticks. The company said the plant completes a “global five-axis production system” spanning Korea, Indonesia, Russia, Kazakhstan and Turkey, and that overseas plants could reach 65 billion sticks a year. KT&G aims to lift the overseas share of its production above 60% by 2028.
Read the full story 2 min read
KT&G said it held an opening ceremony on Oct 6 in Pasuruan, East Java, to mark the start of commercial operations at its new Indonesian plant, and announced the event on Oct 7. The company said KT&G president Pang Kyung-man, East Java provincial secretary Adhy Karyono and Korean ambassador to Indonesia Yoon Soon-ku were among those attending. [ 2 , 3 , 4 ]
The new facility is to have nine cigarette manufacturing lines and can produce up to 21 billion cigarettes a year, the company said. Together with the existing Indonesian plant's 14 billion-stick capacity, that would raise KT&G's Indonesian capacity to as much as 35 billion cigarettes a year, which the company described as its largest overseas production base. Output is to serve the Indonesian market and be exported to Taiwan, Mongolia, Nigeria and India. [ 1 , 2 , 4 ]
KT&G entered Indonesia in 2011 by acquiring a local tobacco company and now ranks fourth in market share there, according to the company, with the ultra-slim ESSE brand and the Indonesia-specific JUARA brand. The company said it agreed with Indonesia's investment ministry on the project in September 2023, broke ground in April 2024 and began trial runs in the first half of this year. [ 2 , 3 , 4 ]
The company said the Indonesian plant completes a “global five-axis production system” spanning Korea, Indonesia, Russia, Kazakhstan and Turkey, following the completion of a Kazakhstan plant in April 2025. It said the start-up largely finishes the 2.4 trillion won overseas capital spending programme announced in November 2024. KT&G expects maximum capacity at its four overseas plant countries to reach a combined 65 billion cigarettes a year and plans to raise the overseas share of production above 60% by 2028. [ 2 , 4 ]
“With the Indonesian plant as the last, KT&G has finished its large-scale overseas facility investment and built a ‘global five-axis production system’ that will be a firm foundation for its global business and future growth,” Pang said, adding that the company would maximize profitability by using its production bases at home and abroad strategically and would keep raising shareholder and corporate value. [ 2 , 4 ]
Why it matters
The plant makes Indonesia KT&G's largest overseas manufacturing base and an export hub for markets including Taiwan, Mongolia, Nigeria and India, according to the company. It largely closes out the 2.4 trillion won overseas capital spending programme KT&G announced in November 2024, shifting the company's production weight further outside Korea. The documents give no figures on the plant's cost, sales or effect on earnings.
Key facts
- KT&G held an opening ceremony for its new Indonesian plant on Oct 6 in Pasuruan, East Java, and announced the start of operations on Oct 7. [ 2 , 3 , 4 ]
- The new plant is to have nine cigarette manufacturing lines and produce up to 21 billion cigarettes a year, the company said. [ 2 , 4 ]
- Combined with the existing Indonesian plant's 14 billion-stick capacity, KT&G's Indonesian output capacity would rise to as much as 35 billion cigarettes a year. [ 2 , 4 ]
- KT&G entered Indonesia in 2011 by acquiring a local tobacco company and currently ranks fourth in local market share with the ESSE and JUARA brands, according to the company. [ 2 , 3 , 4 ]
- Products from the new plant are to supply the Indonesian market and be exported to Taiwan, Mongolia, Nigeria and India. [ 2 , 4 ]
- KT&G said the Indonesian plant completes its “global five-axis production system” covering Korea, Indonesia, Russia, Kazakhstan and Turkey. [ 2 , 3 , 4 ]
- The company said maximum capacity at its overseas plants in Indonesia, Russia, Kazakhstan and Turkey is expected to reach a combined 65 billion cigarettes a year, and it aims to raise the overseas share of production above 60% by 2028. [ 2 , 4 ]
Confirmed by several sources
- The opening ceremony took place on Oct 6 in Pasuruan, East Java, with KT&G president Pang Kyung-man, East Java provincial secretary Adhy Karyono and Korean ambassador to Indonesia Yoon Soon-ku attending. [ 2 , 3 , 4 ]
- KT&G entered the Indonesian market in 2011 through a local acquisition and holds fourth place in market share there. [ 2 , 3 , 4 ]
- The Indonesian plant brings KT&G's Indonesian capacity to as much as 35 billion cigarettes a year, and the company calls the country its largest overseas production base. [ 1 , 2 , 4 ]
- KT&G says the Indonesian plant completes a five-country overseas production structure including Korea, Indonesia, Russia, Kazakhstan and Turkey. [ 2 , 3 , 4 ]
Still unclear
- The investment cost of the Indonesian plant and its expected output or revenue. The documents report the group-level 2.4 trillion won overseas capital spending figure but give no cost for this plant.
- Whether production has already reached full capacity. Documents 2 and 4 say the plant has entered a stable production stage after trial runs in the first half of this year, without specifying current output levels.
- Timing for reaching the 60% overseas production share. The documents only state that the company plans to reach it by 2028; no interim figures are given.
What local media are saying
Timeline, local time
- Korea Economic Daily reports KT&G's Indonesian plant is operating and becoming its largest overseas production base. [ 1 ]
- Asia Economy reports the Oct 6 opening ceremony in Pasuruan and says the plant can produce up to 35 billion cigarettes a year in Indonesia. [ 2 ]
- Dong-A Ilbo reports KT&G has completed its five-country production structure with the Indonesian plant's commercial start-up. [ 3 ]
- ZDNet Korea reports the plant has entered stable production and details capacity, exports and investment plans. [ 4 ]