Indonesia's largest steel producer PT Krakatau Steel and South Korea's leading steel maker PT Pohang Steel Iron Cooperation (Posco) on Wednesday reached a final agreement on joint venture to meet growing demand in Southeast Asia.

President Director of Krakatau Steel Fazwar Bujang and Posco's CEO Chung Joomn. Y signed the agreement at the Indonesian Ministry of State-Owned Enterprises here on Wednesday.

The joint venture aim to build plants in Banten of Indonesia, which costs over 6 billion U.S. dollars.

Posco production capacity reaches 30.5 million tons a year and Krakatau Steel has 2.5 million tons a year.

Previously, Indonesian Investment Coordinating Board chairman Gita Wirawan has said that the government would study the possibility of rewarding tax incentive.