The Quantum Group of Australia will invest up to US$250 million to develop 100,000 hectares of land in East Nusa Tenggara to grow cassava, as well as set up four ethanol processing plants, employing as much as 60,000 local farmers.
The memorandum of understanding between Quantum Petroleum, a subsidiary of Quantum Group, and Southwest Sumba administration was signed Wednesday.
Quantum chief executive officer Ralph Michael told The Jakarta Post the firm would start building the first plant in the fourth quarter of this year, while construction would commence on the other three by the middle of next year.
The firm will invest around $200 million for building the four plants and $50 million for the plantations.
Michael said the 100,000 hectares could produce at least 20 million tons of cassava, or five million tons of sweet potato.
From that yield, a processing plant could produce 100,000 metric tons of bioethanol per year.
"We will employ around 60,000 local farmers to work on the plantation and spend at least $5 million for their wages each month," Michael said.
"The Sumba administration is very supportive, and they are very happy because this project will create employment for the local community," he said.
In a bid to streamline business activities in the backwater province, Quantum suggested the local administration improve infrastructure.
"We have asked the local administration to develop necessary infrastructure such as expanding the airport runway," said Yoseph Wijaya, commercial director of PT Anugrah Kurnia Abadi, Quantum's Indonesian partner.
Anugrah has only a 5 percent share in the joint venture.
Sumba regent Emanuel B. Eha said the administration would fully support the business, and pledged to improve business infrastructure.
"We will support them by providing the facilities they may need," he said.
"This project will have a positive effect on the local economy," Emanuel said.
Aside from biofuel business, Quantum is also planning to plant vegetables and breed Australian cattle.
Indonesia is the second country after Bulgaria where Quantum has invested in bioenergy development projects.
Quantum is also interested to take over palm oil plantations and oil palm processing plants from other local companies.
Quantum originally planned to invest in the bioethanol project in Malaysia six months ago. However, the company decided to shift its operations to Indonesia because of unfavorable regulations set out by the Malaysian authorities. (rff)