• Employment, education, and local business opportunities: Dow estimated that 50.000 jobs would be created in the downstream sectors. In addition, Indonesia would gain technology for operating the plants. This technology would be passed on to Indonesians by training them in Indonesia and in Dow's US and European operations prior to start up. .
Dow asserted in its proposal that the project offered only marginal returns to the company due to some peculiar characteristics: (1) it was heavily capital intensive, (2) the manufacturing cost had a high fixed-cost element, and (3) satisfactory returns would be obtained only when the levels of sales enabled its plants to operate near capacity. The losses during the initial period of production were considered unavoidable, but Dow believed that sufficient market existed for the Venture's products so that most plants would be close to capacity operation within two years of start-up. .
By 1977, major changes have occurred in Indonesia as well as in the world economic conditions that have slowed the growth rate in the chemical industry. Most producers were experiencing problems of overcapacity in the Western countries and Japan. Due to the world oil crisis of the early 1970s, costs of raw materials and energy increased considerably, demand stagnated, and heavily subsidized producers entered the market. In 1977, it was estimated an oversupply of petrochemicals at about 20% above demand. In Southeast Asia a group of Japanese companies were considering the construction of a petrochemical plant in Singapore, which would post great competitive pressure on the Indonesia project.
In response to "Dow Proposal", the Government of Indonesia assumed that the project would bring more benefits to the Company than to the Country. Cost/benefit analysis conducted by government consultants showed a negative return for Indonesia. The government then required some modifications on the project concerning economic and policy issues to be analyzed by Dow for further negotiations.
