Tue, 09 Jan 2007
From: The Jakarta Post
By Duncan Graham, The Jakarta Post, Surabaya
Foreigners often face difficulties starting a business in Indonesia. But the faults aren't all with this country.

Last May bureaucrats and potential investors in East Java were awaiting the first results from an important local lab analysis: Would chicken food made from Surabaya's waste turn out to be nutritious and palatable to poultry?

Probably. Hens will eat anything, even each other. But this project, which needs a US$25 million (about Rp 225 billion) investment, had to convince people.

"There's a lot of skeptics in the government, particularly in animal husbandry, but I'm pretty optimistic," said Surabayan businessman Ron Kho. "Once this gets up and running, everyone will want to be involved."

His partner, Sam Salpietro from Western Australia, whose company BioCulture is pushing the idea to convert foul refuse into fowl food, was equally upbeat.

"This is the only project that can be considered a viable and commercial operation," he said. "There's no need for subsidies or government funding."

But the idea hit speed bumps. Dissatisfied with local lab procedures, the partners decided to get another opinion on their product in Australia.

Sending anything organic into the country next door is difficult enough. When the material is processed trash, the problems are compounded.

"No-one has ever wanted to import rubbish into Australia before," said Salpietro. "We were told it would be easy, but the bureaucratic problems were incredible."

Nonetheless, they've been overcome. Six months later the partners have their analysis from the Western Australian government's chemical laboratory, which they presented to potential investors in Surabaya recently.

The figures certainly look good - like most projections do before a factory is built.

Every day the people of Indonesia's second biggest city produce 3,000 tons of rubbish destined for the dump. The overall quantity is much higher, but efficient scavengers pull tons of plastic, glass, wood and other recyclable out of the refuse long before it gets to the landfill.

Now imagine a low-tech process whereby about half of that waste would be converted into chicken pellets that could be sold at a profit. The garbage pits would then last twice as long in a land where space is needed for the living, not for their waste.

"Where there's muck, there's money" has long been a truism, as many millionaires know. If a job is unpleasant, people prefer to have someone else get their hands dirty.

In the West those hands are expensive, so the cost of processing waste into anything useful is prohibitive. But not in Indonesia.

"There's no doubt this project can only work in developing countries where labor is cheap," Kho said. "Most of the work is manual. It requires teams of people sorting through refuse on a moving table and rejecting everything inorganic.

"The foods and plants which do get through will be cooked and processed to remove impurities. Extra nutrients will be added and the mix forced through an extruder to make pellets."

So far Kho has processed 300 kilograms using manual gear assembled in his paint pigment factory, PT Holland Colours Asia. The extrusion process is much the same so it's a good fit with his present plant. However, heating and other controls will need to be adapted.

"We reckon we can make high quality poultry feed for about US$75 a ton, when other manufacturers are charging US$250 a ton," he said.

"So there's a lot of space to play. We hope existing animal feed companies will want to invest."

OK so far. Now consider the difficulties: Manufacturers of any product want their raw materials to be of a consistent quality, and easily measurable. But no two truckloads of rubbish will ever be the same.

And how will the BioCulture managers ensure that every noxious object is spotted and doesn't make it into the organic waste? Watching rubbish roll by hour upon hour is not a fun pastime, even if the bosses are paying top rupiah for nimble fingers and sharp eyes, as they promise to do.

When mum tosses out her supply of birth control pills because it's time to start a family, and the drugs get into the chicken feed, there could be some curious results. Contraceptive hormones in Australian sewage discharged into the sea are already reported to be doing funny things to fish.

Then there's the danger of transmitting Frankenstein-esque ailments like mad cow disease, if certain animal products get into the feed. Dead rats, for example, seem to be a significant component of Surabaya's rubbish.

Kho stressed that these and other hazards had been considered. The organic waste would be pasteurized to kill any toxins. Continuous laboratory testing would reject suspect feed.

Magnets would pull out anything metallic and closed circuit TV would monitor every stage. The sorters would work in teams, each focusing on only one type of waste. "The end product has to be food-quality," said Salpietro.

The other hurdle is the lack of an up-and-running plant. Potential investors might be more enthusiastic if they could actually see a real banging, clanking, steaming operation rather than a PowerPoint presentation.

Salpietro acknowledged the problem: "Someone has to be a pioneer. We don't have the money, but would be prepared to be shareholders. We've already spent about A$1 million (US$790,000) and five years to get this far.

"People from all over the world keep coming to Indonesia and saying, 'We can solve your waste problems.' They can, but someone has to pay. This system generates income."

"We expected a 30 percent organic recovery but in fact the pilot yielded 50 percent," Kho said.

"We reckon it will cost about US$20 - $25 million to build a viable plant on about five hectares, and take around 18 months to construct. Capital return should be rapid.

"We'd prefer a joint venture with the government to ensure continuous supplies of waste - maybe around 20 percent of the capital.

"I don't normally like dealing with governments but with this project there have been no bribes asked or given."



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