KT&G is accelerating its overseas expansion with the launch of a new manufacturing facility in Indonesia, reinforcing a global production network spanning South Korea, Indonesia, Russia, Kazakhstan and Türkiye.
The Korean tobacco company said Wednesday that it held an opening ceremony for the new plant in Pasuruan, East Java, on October 6. KT&G President and CEO Bang Kyung-man attended the event along with Indonesian government officials and Yoon Soon-gu, South Korea’s ambassador to Indonesia.
The new facility is designed to accommodate up to nine cigarette production lines and eventually reach an annual capacity of 21 billion cigarettes. Combined with the existing Indonesian plant’s capacity of 14 billion cigarettes, KT&G’s total production capacity in Indonesia will rise to as much as 35 billion cigarettes a year.
The expansion is expected to make Indonesia KT&G’s largest overseas production base and a key hub for supplying both the domestic Indonesian market and international markets.
Products manufactured at the new facility will be shipped not only within Indonesia but also to markets including Taiwan, Mongolia, Nigeria and India. KT&G plans to capitalize on Indonesia’s strategic location between the Pacific and Indian oceans to improve supply efficiency across the Asia-Pacific region and other overseas markets.
KT&G entered Indonesia in 2011 through the acquisition of a local tobacco company. Since then, it has expanded its presence with brands such as Esse and Juara, a brand tailored to the Indonesian market. The company currently ranks fourth in Indonesia’s cigarette market and has expanded local manufacturing capacity in response to growing demand.
Construction of the new facility began in April 2024, followed by trial operations in the first half of this year. Its launch marks another major step in KT&G’s efforts to establish a geographically diversified overseas manufacturing system.
The company has invested approximately 2.4 trillion won in overseas production facilities as part of its global growth strategy. Following the completion of a new plant in Kazakhstan last year, the Indonesian facility brings KT&G closer to completing a large-scale investment cycle aimed at strengthening its international manufacturing infrastructure.
KT&G expects its production facilities in Indonesia, Russia, Kazakhstan and Türkiye to eventually have a combined maximum capacity of approximately 65 billion cigarettes annually. The company is targeting an overseas production ratio of more than 60% by 2028.
Industry observers say the expanded production footprint could give KT&G greater flexibility in responding to regional demand while reducing logistics costs and supply-chain dependence on individual manufacturing locations. The strategy also reflects the broader shift among global tobacco companies toward establishing production facilities closer to key consumer markets.
With the major overseas investment program entering its final phase, KT&G is also looking to translate improved production efficiency and cash generation into higher shareholder returns. The company has said it will continue measures such as share buybacks, cancellations and dividend expansion.
Bang Kyung-man said the launch of the Indonesian plant represents a major milestone in KT&G’s transformation into a global company.
“By bringing the Indonesian facility online, we have established an important foundation for our global production network,” Bang said. “We will maximize the efficiency of our overseas manufacturing bases, strengthen profitability and continue enhancing corporate and shareholder value.”
