South Korean tobacco company KT&G has officially launched two new manufacturing facilities in Indonesia, significantly expanding its production capacity and strengthening the Southeast Asian country’s role in the company’s global export strategy.
The new plants are located at the Pasuruan Industrial Estate Rembang (PIER) in East Java. Together, they add an annual production capacity of 21 billion cigarette sticks, increasing KT&G’s total manufacturing capacity in Indonesia to 35 billion sticks a year.
The expansion makes Indonesia KT&G’s largest overseas production base, positioning the country as an important manufacturing and export hub for markets across Asia and beyond.
Two New Facilities, One Major Expansion
KT&G’s new facilities are part of an investment program designed to increase overseas production and support the company’s global growth.
The two plants were constructed on approximately 190,000 square meters of land. Construction began in April 2024 and was completed in November 2025, with commercial operations beginning earlier this year.
The company said the facilities are designed primarily to support exports.
The second plant produces finished tobacco products as well as raw and semi-finished materials, while the third facility produces flavor capsules that can be supplied to KT&G manufacturing sites around the world.
Indonesia Emerges as KT&G’s Global Export Hub
The expansion reflects KT&G’s broader effort to shift more of its production and sales toward overseas markets.
The company said products manufactured at the Indonesian facilities will be exported to more than 90 countries, including markets in Southeast Asia as well as Taiwan, Mongolia, Nigeria and India.
Export-oriented production at the new facilities includes brands such as ESSE, Bohem and Carnival, according to Indonesian business reporting.
KT&G previously identified Indonesia as a strategic production base because of its location and its potential to support exports throughout the Asia-Pacific and Middle Eastern markets. The company had announced its plans for the additional facilities in 2023, before construction began in 2024.
Hundreds of Local Workers Employed
The expansion is also creating local manufacturing employment.
The two new facilities currently employ 459 Indonesian workers, according to Indonesian reporting. KT&G has also indicated that it wants to increase the use of locally sourced materials over time.
The company has emphasized that production equipment and processes at the new facilities underwent verification based on the global quality standards used across its manufacturing network.
A Bigger Overseas Push for KT&G
The Indonesian expansion comes as KT&G seeks to increase the contribution of overseas operations to its overall business.
The company is targeting 10 trillion won ($6.8 billion) in sales in 2027, compared with 6.58 trillion won in 2025, and aims for overseas business to account for half of its sales next year.
KT&G also operates manufacturing facilities in South Korea, Russia, Turkey, Indonesia and Kazakhstan. The company expects the combined annual capacity of its four overseas plants to eventually reach 65 billion cigarette sticks, although it has not specified when that target will be reached.
The Indonesian plants therefore represent more than a capacity increase. They are part of KT&G’s broader attempt to build a more geographically diversified manufacturing network and reduce its reliance on production in South Korea.
With Indonesia now capable of producing 35 billion sticks annually for KT&G, the country’s role in the company’s international supply chain is becoming increasingly significant.
What began as an overseas expansion project is now turning Indonesia into a central pillar of KT&G’s global manufacturing strategy — and the next phase could push even more of the company’s production toward international markets.
WWC ONE MEDIA G,A
