[Edaily Reporter Kim Ji-woo ] #KT&G Corporation has established a “global five-corner production system” linking South Korea, Indonesia, Russia, Kazakhstan, and Türkiye by fully launching operations at its new factory in Indonesia. The company plans to develop Indonesia into a global export hub extending beyond the Asia-Pacific region and expand the share of overseas production.

KT&G Corporation announced on the 7th that it held a ceremony to mark the opening of its new factory in Pasuruan, East Java, Indonesia, on the 6th (local time).

Indonesia is one of the world’s major tobacco markets and an export hub for the Asia-Pacific region. KT&G Corporation first entered the Indonesian market in 2011 through the acquisition of a local company. Since then, it has launched the ultra-slim cigarette brand “ESSE” and the locally exclusive brand “JUARA,” and currently holds the fourth-largest market share in the local tobacco market.

To meet demand in both the Indonesian domestic market and global markets, the company has been moving forward with the construction of a new factory to complement its existing Plant No. 1. Following the signing of an agreement with the Indonesian Ministry of Investment in September 2023, construction began in April 2024, and trial operations commenced in the first half of this year.

The new plant will eventually be equipped with nine cigarette manufacturing lines, enabling it to produce up to 21 billion cigarettes annually. Combined with the existing Indonesian plant’s annual production capacity of 14 billion cigarettes, the total local production capacity will expand to a maximum of 35 billion cigarettes per year. Consequently, Indonesia is expected to become KT&G Corporation’s largest production hub among its overseas operations.

Products manufactured at the new plant will be sold not only in the Indonesian domestic market but also exported to Taiwan, Mongolia, Nigeria, and India. The company plans to leverage Indonesia’s geographical advantage—its location between the Pacific and Indian Oceans—to utilize the country as an export hub connecting the Asia-Pacific region with global markets.

With the launch of this new plant, KT&G Corporation’s large-scale investment in overseas production facilities has entered its final stages. KT&G Corporation has been expanding its overseas production bases since 2023 and completed a new plant in Kazakhstan last April. In November 2024, the company announced plans to invest a total of 2.4 trillion won in overseas capital expenditures (CAPEX).

KT&G Corporation currently operates six overseas subsidiaries in Indonesia, Taiwan, Kazakhstan, and Uzbekistan. It also maintains branch offices in six locations, including Europe, Mongolia, and China. The combined maximum annual production capacity of KT&G Corporation’s four overseas production hubs—in Indonesia, Russia, Kazakhstan, and Türkiye—is projected to reach a total of 65 billion cigarettes. Through the expansion of overseas production, KT&G Corporation plans to improve logistics efficiency and increase the share of overseas production to over 60% by 2028.

Bang Kyung-man, President of KT&G Corporation, stated, “With the new factory in Indonesia as the final piece, we have completed our large-scale overseas facility investments and established a ‘Global Five-Pole Production System’ that will serve as the foundation for our global business and future growth.” He added, “We will strategically utilize our domestic and overseas production bases to maximize profitability and continuously enhance the competitiveness of our overseas operations as well as shareholder and corporate value.”