 |
SGC Energy |
[Alpha Biz= Kim Jisun] SGC Energy has decided to liquidate its Indonesian subsidiary, which has fallen into capital impairment. The company initially established the entity to secure plant construction contracts in line with the expansion of domestic petrochemical firms into Indonesia. However, after a decade of no significant achievements, it has opted for liquidation. Moving forward, SGC Energy plans to focus its overseas expansion on regions with proven business viability, excluding Indonesia.
According to a report by Edaily on Tuesday, SGC Energy plans to dissolve PT SGC ENERGY Indonesia within the year. The subsidiary was founded in 2013 to align with the expansion of domestic petrochemical companies into Indonesia and secure plant construction projects.
The decision to liquidate the Indonesian entity is attributed to its lack of tangible results. Amid structural shifts in the global petrochemical market, SGC Energy has chosen to concentrate on its core businesses, shutting down the unprofitable Indonesian operation.
Since its establishment in 2013, the subsidiary has failed to secure a single contract while continuously incurring expenses. Over the past 12 years, its total revenue has remained close to zero.
As a result, by the end of last year, the subsidiary had fallen into complete capital impairment, leaving it beyond recovery. This has led to a consensus that SGC Energy’s venture into Indonesia’s plant construction sector was ultimately a failed investment.
Another factor influencing the liquidation decision is the oversupply crisis driven by China, which has made it increasingly difficult to secure profits in commodity-based products. The deepening market downturn due to excess supply made it unfeasible to maintain the subsidiary in hopes of future plant contracts.
Since the 2010s, Indonesia had attracted global petrochemical firms as a key production hub for commodity products due to its low labor costs and stable local demand. However, the influx of low-cost Chinese products has significantly weakened the region’s competitiveness, leading to a trend of petrochemical companies pulling out of Indonesia. Lotte Chemical, for instance, recently sold part of its Indonesian subsidiary’s stake to improve financial stability.
Going forward, SGC Energy plans to focus on overseas markets with proven profitability, such as Saudi Arabia, Malaysia, and Vietnam. Its subsidiary, SGC E&C, has already demonstrated success, securing a 250 billion KRW contract in Saudi Arabia last year.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
