June 13, 2024
Investment

Indonesian Tobacco Billionaire Boosts Investment In Delayed Airport Project


A unit of Gudang Garam—controlled by billionaire Indonesian Susilo Wonowidjojo—has raised its investment in its delayed airport project in the city of Kediri in East Java as the tobacco giant diversifies into new businesses amid declining cigarette sales.

Originally slated to open last October, the Dhoho Airport project has now been scheduled to open later this month after Gudang Garam invested an additional $63 million to complete the project, bringing its total investments to $888 million, the Kediri-based company said in a statement this week. The project has suffered multiple delays, resulting in escalating investment cost, originally pegged at $634 million.

The airport—the first in Indonesia to be completed by the private sector—can handle 1.5 million passengers in the first year but Gudang Garam aims to increase its annual capacity in a few years to 4.5 million passengers and then ultimately to 10 million passengers, boosting the economy and tourism in the southern regions of East Java.

Gudang Garam has been diversifying into new businesses such as construction, aircraft leasing and toll roads in recent years as it grapples with declining profits after Indonesia stepped up measures to curb smoking, especially among the young.

With many of President Joko “Jokowi” Widodo’s infrastructure projects underutilized, some analyst say the Dhoho Airport could face a similar fate. “It’s less likely that they will achieve it (1.5 million passengers) in the first year, I think they will need at least five years,” Alvin Lie, an aviation expert said to Forbes Asia in a phone interview, adding that the local government will have to do boost efforts to promote Kediri as a tourist destination.

With a net worth of $3.6 billion, Wonowidjojo and his family, ranked No. 16 when the list of Indonesia’s 50 Richest was published in December 2023.

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