American firm to invest $50m in Gowa pulp plant

American firm to invest $50m in Gowa pulp plant

JAKARTA (JP): Washington DC-based First Asia Financial
Services Ltd. (FAFS), a company which manages pension funds in
the United States and Britain, plans to invest a total of US$50
million for the establishment of a pulp and paper plant in the
regency of Gowa, South Sulawesi.

FAFS president director Anthony Stout said here on Monday
about $25 million of the planned investment would be used for the
purchase of equipment and machinery.

Stout said that the expenses for the purchase of the equipment
could be reduced if local companies could supply some of them.

"We want 80 percent of the equipment to be made available by
local suppliers," Stout said following a meeting with
representatives of the Gowa regency at the Grand Hyatt Hotel in
Jakarta on Monday evening.

Gowa regent Syahrul Yasin Limpo represented the Gowa
administration in the meeting.

Stout cited state-owned heavy industry PT Barata as a possible
supplier.

"If the investment requirement exceeds the committed figures,
we may cooperate with a consortium," Stout said. "The return on
investment will be made in the next six to seven years."

The new pulp and paper factory, which will replace the defunct
paper factory Pabrik Kertas Gowa (PKG) will be named PKG-Raya.

According to Stout, the Gowa administration had agreed to
initially provide 5,000 hectares of land for the location of the
new plant.

Unlike PT Inti Indorayon Utama in North Sumatra which
processed pine trees for its pulp, the raw material of the PKG-
Raya pulp will be the kenaf plant.

He said that intensive talks were being held with the local
administration. "We are sending our team of experts to Gowa to
ascertain the readiness of the local administration."

Stout reiterated his confidence that the establishment of the
new pulp factory in Gowa could be realized. "I see the Gowa
administration as very serious in our negotiations."

"We've invested in several countries for the past 25 years,
and Gowa is serious in accepting us and took us to the defunct
paper factory."

Stout also expressed his optimism that the paper product would
be absorbed well by the local market. "There is no paper factory
in the eastern part of the country."

He said that the initial production capacity of the factory
would be 40,000 tons per annum. "The figures will change based on
the market demand."

Sources at the Gowa regency said that the main constraint in
the agreement on investment in the regency was a security
guarantee.

"The prospective investor (FAFS) has frequently asked for a
guarantee of security for their investment, and Stout has
reiterated that non-governmental organizations could play a
significant role in the business," a regency official, who asked
for anonymity, said.

Regent Syahrul said that the pulp industry would bring about
economic progress in Gowa and in the South Sulawesi province.

"We want that all layers of society to support the mega
project," said Syahrul. (31/sur)