Lealea Enterprise Co., Taipei based one of the largest polyester filament yarn and polyester chip makers in Taiwan, will be setting up its first overseas factory in Indonesia later this year.

Lealea Chairman James Kuo has made investing in Indonesia one of the company’s strategic priorities and set the goal of launching operations at the Indonesian site in the second half of the year, the company said.

Lealea signed a memorandum of understanding with PT Taroko Indonesia and is to spend up to US$50 million to acquire PT Taroko’s production facilities located in Bandung, Indonesia’s third-largest city in the Southeast Asian country.

PT Taroko is a joint venture between Taipei-based Taroko Textile Co and Nan Ya Plastics Corp, one of the main subsidiaries of the Formosa Plastics Group subsidiary.

Taroko Textile is selling the facility because it wants to diversify its interests beyond the textile sector and Nan Ya did not want to continue its investment in PT Taroko, Lealea seized the chance to acquire the facility, which it plans to upgrade, to start its business in Indonesia.

Kuo has repeatedly sent delegations to Bandung to evaluate the 50-hectare production site and conduct an assessment on how to upgrade the production facilities, the company said.

According to Lealea, its Bandung plant will be initially involved in the fabric dying and finishing business before expanding to yarn making in the future.

The company believes that demand for textile products in the Indonesian market is strong, and because textile exports from Indonesia to Japan and South Korea have duty-free status, the new plant will export half of its production.

The Lealea Group, of which Lealea Enterprise is part, also plans to have another subsidiary, Li Peng Enterprise Co set up open warehousing facilities in the US in the second half of this year.

The facility will store the nylon chips and polyester chips that Lealea produces at its plants in Taiwan and Southeast Asia to meet demand in the U.S. market and will be able to accommodate about 2,000 tonnes of textile products.